More feds hit $1 million mark

2016 was a good year for fed workers investing in TSP, despite ups and downs in the market. Senior Correspondent Mike Causey digs deeper into what's coming up n...

What are the odds that you will be one of the best-off folks in your neighborhood or retirement community once you leave from the government? The short answer: Pretty good.

If the stock market keeps on keeping on and federal workers continue to invest regularly in their in-house 401k plan, thousands more will become Thrift Savings Plan millionaires this year.  And there are currently almost 10,000 people with millionaire status. Another 1.4 million account holders have balances between $50,000 and $249,000 after an average of 18-plus years with Uncle Sam. Meaning, most have lots of time to go and, hopefully, grow those accounts.

As of mid-December 2016, there were 35,161 TSP account holders with balances ranging from $750,000 to $999,000.  The average account holder has been in government for just over 28 years, meaning they grew their balances by regular investing in the TSP’s C, S and I funds, which are indexes of the U.S. large cap (C),  small cap (S) and the I-fund, which is a limited international index fund.

When the TSP started, the only people with million dollar accounts were well-to-do private sector lawyers turned federal judges or people who came into government after long, lucrative careers in the private sector.

Why did so many very smart, very rich people,  switch their retirement savings accounts to the federal TSP?  Several reasons, including the safety aspect.

As an investment, the TSP is probably the most heavily monitored 401k plan on the planet. Participants range from active and retired letter carriers to top NASA scientists,  FBI agents and CIA officers as well as members of the House and Senate.

The TSP also offers a safe haven option, the unique treasury-securities G-fund not available to any other 401k investors. Oh, and the lowest administrative fees in the business, which Vanguard fund founder John Bogle says can save long-term investors thousands of dollars over time.

Despite the ups and downs of the markets in 2016 — including dire warnings of a major downturn following Brexit and the surprise (to many) results of the November presidential election — it was a good year. The G fund was up 1.82 percent, C fund up 12.01, S fund up 16.85 and the I fund up 2.10 percent.  For more on that, click here:  Which TSP fund had the best 2016?

So how does the TSP work and what’s coming up?   On Wednesday’s Your Turn radio show (10 a.m. EST) we’ll be talking with Kim Weaver. She’s director of External Affairs for the TSP.

You can contact us during the show or email any questions or comments to me now. And we (rather she) will answer them.

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Nearly Useless Factoid

By Steff Thomas

The average life of a $1 bill is 5.8 years, $5 bill is 5.5 years and $10 bill is 4.5 years.

Source: Federal Reserve

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