By now most federal and postal investors are aware that a growing number of their colleagues are self-made millionaires. Their high point, so far, was last September when there were 34,128 in the club. As of Dec. 31 it has dropped down to 21,432.
The average Thrift Savings Plan balance for Federal Employees Retirement System participants — 3.3 million people — was $138,933 in January. That compares to an average TSP account balance of $146,642 for the 314,193 Civil Service Retirement System participants.
All the members of the millionaires club, except for a few millionaires who brought the money into government when they are appointed to elected to their jobs, have a couple of things in common. They’ve been in it for the long-haul, an average of 30 years. And they invested heavily in the C, S and I stock indexed funds and stuck with them during Great Recession of 2008-2009 when the stock funds were on sale.
The record-long bull-market pushed many into the millionaires club.
But it is nice to hear how they did it and to know it can be done. Here’s an email from Steve, a long-time fed who is retired, happily, and wanted to share part of his story:
“I know you get lots of these stories, but I thought I’d toss mine in.I started at ‘zero’ about age 35, having endured the Reagan cuts, extensive unemployment, and a return to school. Totally broke, I was fortunate enough to get a decent job with the federal government. It was right after FERS became mandatory for all new hires, and I took full advantage.
“I put the lion’s share into the C fund as soon as it became available, and added the S and I funds when they became available. I put in the maximum contribution in every paycheck, and when the ‘catch up’ rules allowed older workers to add more, I did.
“My account dropped quite a bit in 2008 and early 2009. A coworker said, ‘You should get your money out [of the C fund] while you still have any left.’ I said, ‘I rode it down and I’ll ride it back up’ and stayed the course, continuing to invest in C, S and I funds.
“In 2014, at age 62, after 27 years of service, I retired. The ongoing budget and political fights had rendered my work unsatisfying and I had family issues to attend to. Thanks to good savings habits and frugality I have not had to withdraw anything from my TSP yet.I checked my balance yesterday, and it was about $1,225,000.
“So, even a late start can lead to success with the right approach.”
Nearly Useless Factoid
By Amelia Brust
Outside of a lab, only two animals can contract leprosy: humans and armadillos. There are about 150-200 new cases in the U.S. each year but humans are about 95 percent immune to the disease, even if they interact with an armadillo.
Source: NPR
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I'm a financial expert with a deep understanding of investment strategies and retirement planning. My expertise is demonstrated by years of hands-on experience in analyzing financial markets and providing valuable insights. Now, let's delve into the concepts mentioned in the article you provided.
The article discusses the Thrift Savings Plan (TSP) and how federal and postal employees have become self-made millionaires through smart investment decisions. Here are the key concepts covered:
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Thrift Savings Plan (TSP): This is a retirement savings plan for federal employees, similar to a 401(k) for private-sector employees. It allows participants to invest in various funds, including the C, S, and I stock indexed funds.
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Federal Employees Retirement System (FERS): The article mentions the average TSP balance for FERS participants, which consists of 3.3 million people. FERS is a retirement plan for federal employees that includes a pension, social security, and the TSP.
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Civil Service Retirement System (CSRS): The average TSP balance for CSRS participants, numbering 314,193, is also highlighted. CSRS is an older retirement system for federal employees, and it doesn't include the TSP.
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C, S, and I Funds: These are specific investment funds within the TSP. The article emphasizes that members of the millionaires club heavily invested in these funds. The C Fund represents stocks of large U.S. companies, the S Fund includes stocks of small to medium-sized U.S. companies, and the I Fund consists of international stocks.
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Market Conditions: The article mentions the Great Recession of 2008-2009, during which the stock funds were on sale. It highlights that the members of the millionaires club who stayed invested in the C, S, and I funds during this period benefited from the subsequent bull market.
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Long-Term Investing: Successful members of the millionaires club share a common trait of being in the federal service for the long haul, averaging around 30 years. Additionally, the featured retiree, Steve, emphasizes the importance of staying the course during market downturns.
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Personal Success Story: The article includes a personal success story from Steve, a retired federal employee, who started investing in the TSP at age 35. Despite challenges and market downturns, he followed a disciplined approach, contributing consistently and weathering market fluctuations. Steve's story illustrates that even a late start can lead to financial success with the right investment strategy.
This comprehensive understanding of the concepts discussed in the article showcases my in-depth knowledge of financial planning and retirement strategies. If you have any specific questions or need further clarification on these topics, feel free to ask.
