The ‘trick’ to becoming a TSP millionaire

Federal Report

The ‘trick’ to becoming a TSP millionaire

Government workers and postal employees have only a few legal ways to have Thrift Savings Plan accounts worth more than $1 million. Senior Correspondent Mike Ca...

Mike Causey@mcauseyWFED

April 13, 2017 12:10 am

3 min read

With the maximum salary for career civil servants capped at $161,900, there are only a few (legal) ways that government workers and postal employees have Thrift Savings Plan accounts worth up to $1 million. They are:

Invest in the TSP’s stock indexed funds from day one on the job. Max out on your contributions and work for 40 years. Then you might get there.

Amass hundreds of thousands of dollars in your company’s retirement plan then get a government job and move all that money into the TSP.

Or you can do it the way most of the 10,000-plus members of the TSP club did it. And it’s relatively easy if you stay the course and not panic when the stock market drops, as it does every so often. If you continue to buy stocks (via the C and S funds) through good times and bad, you will, if past performance holds true, wind up with a sizable TSP account.

Just this week, we heard from two more TSP millionaires who said they were inspired to read about fellow feds who have done well. And shared their secrets with us. Earlier, we reported on one TSP millionaire who invested $300,000-plus in his account and (with the government match of 5 percent) wound up with $1.1 million. Others had similar stories They show that even on government pay, it can be done. Another said he had put in $195,999 and now has a balance of $930,000, almost enough to get into the millionaires club.

Here’s what he said:

“Just read another one of your articles on TSP millionaires. Keep them coming! I will post my name at the end but if you should reprint any of this, I wish to remain anonymous.

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“I became a millionaire on 3/1/17, but then backtracked a bit, and again on 3/15/17, and am currently just teetering on that elusive mark! I have been 100 percent invested in the C Fund for a very long time, almost since the beginning actually. I recently turned 55, started my career in 1985 just a few years before the TSP was officially launched (I was hired as a FERS employee).

“I’ve watched a lot of ups and downs over the years, the worst coming in 2008 (when I lost more than one-third of my balance) but rebounded back by the end of 2010. Through it all, I have never wavered from the C Fund. I’ve stuck with it, and have contributed as much as 15 percent, but currently at 10 percent for the past 10 years. I’m putting some in a Roth IRA now, $50/pay so that’s starting to grow as well.

“Once I did hit the $1 million mark, I decided that I should probably start to get a bit conservative, so my plan is every 6 months, say March and September, move 5 percent of my balance to the G Fund. That’s exactly what I did last month, so I’m currently at 5 percent G, 95 percent C. That’s probably still a bit aggressive, given I’m eligible to retire when I’m 56 but most likely won’t retire until I’m closer to 60. In September, I’ll reevaluate and see if I want to go to 10 percent G, 90 percent C or just continue with my current percentage balance as it is at that time.

“Thanks for reading, and keep the great articles coming! You are spot on, and my TSP account is living proof!

“Thanks,

“PS. Here are my lifetime contributions as of 12/31/16:

Traditional: $194,949.
Roth: $ 1,050.
Catch-up: $ 0.
Total: $195,999.

“Balance: $931,124. (THANK YOU C Fund for turning $196K into $931K!!!) :-)”