Wanna be a TSP millionaire: Have you got the right stuff?
For some, TSP (with its generous government match) will provide one-third to as much half the money they have to spend in retirement. Regardless of the percenta...
Many people consider Michelangelo’s statue of David to be the most perfect sculpture ever. It was done in the early 1500s and stands 10 feet tall. Pretty impressive.
Yet a friend of mine, Bill B, claims that his brother in-law, who has seen it in the flesh, thinks the masterpiece is overrated. After studying it for a few minutes, he concluded that virtually anybody could have done it.
“All you have to do,” brother-in-law-said, “is get a really good piece of marble, then chip away all the pieces that don’t look like David.”
Of course he’s right. Up to a point! But he’s leaving out some important details. The sort that face federal, postal and military personnel deciding how — and how much — to invest in their Thrift Savings Plan accounts. For some, TSP (with its generous government match) will provide one-third to as much half the money they have to spend in retirement. Regardless of the percentage, it’s a lot. So how do you become a TSP millionaire? We asked D.C.-area financial planner Arthur Stein if there is a magic formula. Several of his clients are TSP millionaires. The recent stock market nosedive reduced that number. And it has many investors rethinking their situation. Which is the subject of today’s Your Turn radio show (10 a.m. EDT) with Art Stein. If you have questions for him send them to me before showtime: mcausey@federlnewsnetwork.com
Meantime, here’s what he says about doing the right things to become a TSP millionaire, and also what’s caused the drop in current and former feds with million dollar nest eggs:
Market declines reduce the millionaires club
After positive returns in July, all TSP funds (except G) declined in August. So fund returns continue to be negative year-to-date and over the last twelve months.
The L Funds also declined year-to-date and over the last twelve months.
One result is that the number of TSP millionaires (TSP participants with balances over $1 million) has also declined. According to an August 2022 study of TSP participant balances, the number of “TSP Millionaires” is down 36% from the end of 2021 through August 2022.
At the end of 2021 there were 112,880 TSP investors who were members of the TSP Millionaires club. That was a record high. Now, with markets in decline, the number of TSP Millionaires has declined from 112,880 at the end of 2021 to 72,241 as of August 2022, a 36% drop. The new number is the lowest number of millionaires since 2020 when there were 75,420 TSP Millionaires.
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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.
