6:19 am, May 28, 2015

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  • TSP Millionnaires and Record Rollovers
    Celtic Wolf
    The average federal employee, either under FERS or CSRS, may be unable to obtain the TSP successes of the former lawyer turned federal judge. If a the average is $68k (roughly) that is a long way from $1M --- and moreso when reflected in an annuity. It appears that we all (FERS and CSRS) should contribute to TSP, yet also realize that it (TSP) is a supplement to Social Security or CSRS annuity or payments. All said, as our grannie used to say "keep some money set aside for a rainy day" and as our current media tell us "the rainy days are here". TSP may translate then to Tiny Supplemental Pension. (yet better that none). Wish I was a former lawyer and current federal judge; or just wish my spouse was.
    Celtic Wolf
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  • TSP Millionaires and Record Rollovers
    Lets Be Free
    I am a CSRS employee with $390K in my TSP, so I would suggest that it's quite possible for high-income FERS employees, who had higher contribution limits in the early years (10 percent vs. 5 percent) and who received matching contributions all along, to be TSP millionaires or close to it. Strategically, the TSP is best suited for the low-risk or bond part of one's portfolio since there is no risk to the G Fund valuation. Bond funds outside of the TSP lose value when interest rates go up, which seems almost certain to happen going forward with the economy stabilizing and the Fed pulling back from its extraordinarily accomodative policy stance. Diversification isn't a major concern in the TSP world. Between the C and S funds, 100 percent of publicly traded US stocks are included. And the I fund covers most of the developed world (e.g., Japan, Germany, UK, France, Australia, Netherlands, etc.) in Asia and Europe. The only significant missing economies are our neighbors in North and South America (which unquestionably should be added as a new option). C, S and I funds combined probably have over 95 percent of the world's market cap, which is about as diversified as you can get. When it comes time to retire I will maintain or supplement from other accounts the low-risk portion of my overall portfolio in the TSP to take advantage of the unreplicable features of the G fund. But I will continue to invest in stocks in my brokerage accounts so I can target my investments at particlular stocks, styles and sectors and take advantage of leveraged-long and ultra-short ETF's. If you are just going to allocate your portfolio to broad indices (and seldolm or never change) you are probably as well off or better off in the TSP than you are out of it.
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  • TSP Millionnaires and Record Rollovers
    pdillm
    This goes against 35+ years of hearing about diversification. While the TSP will never go away, why place all the eggs in one basket? I like having my Roth IRA at Vanguard where the fees are low and I have something somewhere not tied to my employer.
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  • A Roth IRA is a good idea
    FERS Fed
    But I trust you are first maximizing your TSP contributions, including "50+ catchup" contributions if you're eligble. Here's why -- given our national debt level and annual federal budget deficits as far as the eye can see, do you really see gains sitting in Roth IRAs going untaxed forever? I don't, especially not with current crowd in power. What Congress giveth, Congress taketh away, and can be darned quick about it, too!
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  • TSP
    Linda
    Celtic Wolf, sorry but you have it wrong. Social Security is supposed to be a suppliment to your retirement, not the TSP being a suppliment to Social Security. Social Security was never intended to be the main retirement vehicle for people, although most people forget that now. pdillm is smart putting money in a Roth. As soon as I can take it from my check I will as well.
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  • Eggs in one basket
    zak6482
    I have to agree it's foolish to put everything in TSP. I've spent a number of years involved with my retirement funds and learning everything there is to know so I can make sure I hit my goals (which coincidently happen to be one million USD). The article mentions the G-fund as a good thing but it's the worst place to put your money unless you're close to retirement. TSP is nothing but a limited set of index funds. Sure, they have lower expenses but only about 1% less than I pay elsewhere. My returns more than make up for that and I can select from a wide variety of funds to tweak my holdings. People need to remember that the social security administration has already estimated that most of us with at least a couple decades to go will likely not get much back and personally, I figure on getting nothing. I've actually considered leaving federal service, at least to go back to school, just so I can roll over my funds to my other accounts and get some proper returns. I couldn't care less if people don't learn how to manage their money except that if they keep messing it up, they'll cause another recession like this one and next time I may not be as well positioned as the last. Cheers.
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  • $68K average TSP account isn't going to last long in retirement
    FERS Fed
    The easiest way I've found to maximize TSP contributions, mine as well as agency matching, is to submit an increase in contributions near the end of the calendar year to put some portion -- a percentage or a fixed dollar amount -- of the next year's pay raise into the TSP. For example, if a pay raise is approved for 2011, submit an increase in your contributions sometime in mid-December to put part of the pay raise in the TSP so that the increase takes effect the same pay period as the raise. Time it right and you'll never miss that part of the pay raise now going into your TSP account. Do it for 3-4 years in a row and you'll be contributing enough to get the full 5% agency match. Another tip for high earners is to figure out when you'll max out your OASDI contributions ($106,800 for 2010) for the year (it's usually sometime in October or November) and submit an increase in your TSP contributions to put the money that was being deducted for OASDI into your TSP account for the 4 or 5 pay periods thru the end of the year. Just don't forget to reduce your contributions before the start of the next year.
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