When it comes to investing for retirement, who's on the right track? Boomers or millennials? Senior Correspondent Mike Causey says in government it may be the old...
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When you are investing for the long-haul (and you also have a guaranteed inflation-protected pension as part of your financial lifebelt) is playing it too safe smart? Or is it actually risky behavior?
When young investors put most of their money in a super-safe, but low-yield investment, are they doing the right thing, or are they wasting valuable investing/compounding time?
Arthur Stein, a Bethesda-based financial planner, believes that too many young, lower income federal workers are wasting one of their most precious assets (time) as they invest in the federal Thrift Savings Plan. Stein also feels that too many older feds and retirees may have too much money invested in the super-safe Treasury securities G-fund, and not enough in the higher-risk, higher-reward stock-index C, S and I funds.
Stein reviewed data from the TSP Participant Behavior and Demographics report for 2010-2014 and found the following:
So what, if anything, is wrong with those numbers?
Many private sector employees don’t have pension plans. They must rely on Social Security and any investments they make. Feds have the CSRS or FERS retirement programs, plus the TSP. They can also get a 5 percent match from the government. And most current workers will be eligible for Social Security. So shouldn’t feds be bolder investors than they are?
Stein asked, does it make sense that younger and lower income investors have more money in the low-yield G fund? Should younger TSP investors be more allocated to the stock and bond funds than the G-fund? Also, why don’t more people manage their accounts? Not making frequent adjustments to time the market, but not ignoring their account either?
Stein was our guest on yesterday’s Your Turn radio show. To listen, click here.
By Michael O’Connell
Mike Causey’s favorite sandwich is a Reuben.
Source: Mike Causey
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Mike Causey is senior correspondent for Federal News Network and writes his daily Federal Report column on federal employees’ pay, benefits and retirement.
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