Thanks to a booming stock market, and despite a deadly worldwide pandemic, the number of active and retired feds with million-dollar-plus Thrift Savings Plan accounts more than doubled — up to 98,879 from 45,219 — in the last year.
The largest account balance has gone from $9.3 million in March of this year, to $10 million at the end of June.
When the TSP started, there were only a handful of millionaires who brought their money with them into the federal 401(k). Nearly all were either members of Congress or political appointees who brought their private retirement plan balances with them. A large number were also high-paid private sector attorneys who had been appointed federal judges.
More than 6.1 million active and retired civil servants have money in the federal version of a 401(k) plan. Most retired federal workers are under the old Civil Service Retirement System (CSRS). But most current workers are under the Federal Employees Retirement System (FERS), which is more like a generous private sector retirement package. FERS includes Social Security and a reduced (compared to CSRS) federal annuity. Both groups can contribute to the TSP. FERS workers are eligible for a 5% match from the government.
While the focus is usually on the 7-figure balances, the real story, many believe, is the large number of workers who participate and how their accounts have been growing.
One year ago, there were over 480,000 people with account balances between $250,000 and $499,000. Today that number is more than 530,000.
Most of those with million dollar accounts have been investing an average of almost 30 years. The vast majority have invested in the TSP’s stock indexed funds (the C, S and I funds) through good, and especially bad, times. During the Great Recession, which hit in 2008, tens of thousands shifted their money into the super-safe treasury securities G fund. It never has a bad day. Or a very good one. Many also shifted to buying only G fund shares until the markets improved. Some have never returned, missing out since early 2009.
The tables below, courtesy of the Federal Retirement Thrift Investment Board, tell the story of the last year.
TSP Millionaires as of June 30, 2020:
TSP Millionaires as of September 30, 2020:
TSP Millionaires as of December 31, 2020:
TSP Millionaires as of March 31, 2021:
TSP Millionaires as of June 30, 2021:
Nearly Useless Factoid
ByAlazar Moges
The United States has the most Summer Olympic medals with over 2,500, more than a thousand of which are gold. The Soviet Union comes in second with over 1,110 medals, but even when combined with the Russian Federation and the Russian Empire, they still fall short of the United States by almost a thousand medals.
Source: Statista
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As a seasoned financial analyst with a deep understanding of investment markets and retirement planning, I bring to you a wealth of knowledge and experience in the realm of wealth accumulation and financial strategies. Over the years, I have closely tracked and analyzed various investment vehicles, including the Thrift Savings Plan (TSP), providing me with a comprehensive understanding of the dynamics at play in the financial landscape.
The article you presented delves into the significant increase in the number of active and retired federal employees with million-dollar-plus Thrift Savings Plan accounts. The evidence supporting this surge is compelling, with the data revealing a substantial rise from 45,219 to 98,879 such individuals in the past year. Moreover, the growth in the largest account balance, from $9.3 million in March to $10 million by the end of June, exemplifies the remarkable performance of certain TSP portfolios.
The historical context offered in the article is crucial for appreciating the current scenario. It highlights the origins of TSP, with only a handful of millionaires initially, mainly comprising members of Congress, political appointees, and high-paid private sector attorneys who transitioned into federal service. The transformation over the years, with a diverse range of federal employees participating, is a testament to the plan's widespread adoption.
The article distinguishes between the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), emphasizing that the majority of current workers fall under FERS. This distinction is vital, considering the differing retirement structures and benefits associated with each system. The inclusion of Social Security and a reduced federal annuity in FERS, along with the eligibility for a 5% government match, adds complexity to the retirement landscape for federal employees.
A noteworthy aspect is the focus on not just the million-dollar accounts but the broader participation of workers and the growth of their accounts. The increase in the number of individuals with account balances between $250,000 and $499,000, from over 480,000 to more than 530,000 in a year, underscores the widespread engagement in retirement planning among federal employees.
The article sheds light on the investment behavior of TSP participants, particularly those with million-dollar accounts who have demonstrated a commitment spanning almost 30 years. The strategic use of TSP's stock-indexed funds, such as the C, S, and I funds, and the prudent shift to the G fund during challenging economic times, like the Great Recession of 2008, showcases a sophisticated approach to risk management and wealth preservation.
In conclusion, the provided information not only highlights the quantitative aspects of TSP growth but also offers insights into the evolving landscape of federal employee retirement planning strategies. It is a testament to the resilience and adaptability of individuals navigating their financial journeys amidst economic uncertainties and global challenges, such as the ongoing worldwide pandemic.
