When it comes to saving/investing for retirement, federal and postal workers, and especially members of the uniformed military, are a pretty sophisticated bunch. As in they know a good thing — their in-house 401k plan — when they see it.

The Thrift Savings Plan now has more than 4.6 million account holders and is worth more than $420 billion.

A survey done for the Federal Retirement Thrift Investment Board says that 87 percent of investors are “satisfied” with the program and 58 percent think it is better than other employer-backed savings plans. That latter group must be reading and watching financial news and seeing what’s happening to retirement plans elsewhere.

A growing number of private sector companies, including some really big names, are eliminating pension plans for current employees. Others have reduced or eliminated matching contributions to employee 401k plans. Some have changed the way matching contributions are made so that employees — instead of getting regular biweekly or monthly matches — get nothing until December. In most cases, workers who retire before the annual lump-sum match is made get nothing.

When the Great Recession hit some firms — small, medium and Fortune 500 — eliminated matching contributions. Others reduced matching contributions and one large company eliminated matching contributions for two years, then restored them, but only on the first $450 employees contributed.

“In some cases, employers justified reducing or eliminating matching contributions based on the bottom line,” a benefits expert said.

The majority of currently retired feds left under the old Civil Service Retirement System. CSRS is a stand-alone defined benefit program. The CSRS annuity is based on the employees’ highest three-year average salary and length of service. Pensions are fully indexed to inflation.

Most current federal workers, those still on active service, are under the “new” (circa 1980s) Federal Employees Retirement System. FERS offers a reduced civil service benefit. But employees are covered by Social Security and they get a match of up to five percent (from the government) to their TSP account.

The number of TSP participants with $1 million-plus accounts keeps growing. Some of that is from high-level appointees (and federal judges) transferring outside money into the TSP when they joined government. But a growing number of million-dollar account holders did it the old way. They invested (in stock funds) and rode out the markets lows and highs, continuing to buy when others fled to the safety of the G-fund.

“Some friends said I didn’t know what I was doing. I stayed with the C, S and I stock funds even when the market went into that long nosedive,” one millionaire said. “I kept buying when share prices had less value. All of a sudden, my statements started looking very good. I’m living proof for the stay-the-course school of investing. Obviously, it helps to have a good course.”

NEARLY USELESS FACTOID:

By Michael O’Connell

The English name for the fifth day of the week in the Judeo-Christian calendar — Thursday — derives from the Old English word “Þūnresdæg” and the Middle English word “Thuresday“, which means “Thor’s day” after the Norse god.

Source: Wikipedia.

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TSP funds dip into the negative in September
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Secret Service chief resigns amid security lapses
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