“One of the main reasons for poverty is a lack of money.” — From the explanation of poverty on Wikipedia

Good to know! And yet…

While lack of money is, no doubt, a leading cause of poverty, that explanation alone doesn’t quite say it all.

Last week we reported that 27 percent of all FERS employees are not contributing to the Thrift Savings Plan. When the FERS program was set up, it was estimated than anywhere from one-third to as much as one-half of the money feds will have to spend in retirement will come from their TSP investments. Assuming they make them, that is.

The 27 percent figure is a fact, not an editorial comment or opinion. Although the TSP is an important component of their total retirement package, those in the 27 percent group are not getting the benefit of the government match. For FERS employees who contribute 5 percent of pay, or more, the government will also contribute 5 percent. That’s a tax-deferred pay raise that, for whatever reason, many are rejecting.

A number of readers said their non-participating coworkers must have rocks in their heads. Or words to that effect.

But many defended the stat, saying they suspect most of those not getting the full 5 percent match just don’t make enough money. That they are probably new employees, or those in lower pay grades and they can’t afford to put 5 percent of their meager salaries in the TSP. At least not at this stage of their careers.

Here’s a comment from a long-time, GS 5 fed. She’s a couple of years from retirement and can only afford to contribute 5 percent of her salary to the TSP. So she’s getting some, but not all of the match.

“I saw your article on more than a quarter of FERS employees are not contributing the full 5 percent salary amount into the TSP. You stated it’s a case of free money being turned down. I see it as underpaid federal employees, who cannot put in 5 percent. I’m a grade five employee, step 10. Been with IRS for 28 years. Economic cost is far too high, health insurance goes up. As well utility goes up and your pay doesn’t go up. So how can I give 5 percent? They keep giving us a 1 percent raise. You go figure.”

Another said “…putting anything aside is tough for low-paid workers. That said they have GOT TO DO IT. Cut out smoking, if you smoke. Drinking, if you drink. Starbucks, if that is your thing. The point is to put something into the TSP every pay period. If it is 2 percent, so be it. The amount will automatically increase when (if) we get a pay raise and the deduction will be worth more, but painless.”

NEARLY USELESS FACTOID

By Dena Levitz

The 2008 movie “27 Dresses,” starring Katherine Heigl grossed almost $77 million, on a budget of $30 million.

Source: IMDb

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