9,500 new TSP millionaires

Thanks to a red hot stock market and steady investing, 9,540 additional federal and postal workers became Thrift Savings Plan millionaires between March 2018 and the end of March this year. That’s despite ups and downs in the now decade-long bull market, and a major drop Christmas eve 2018. The April figures for the TSP’s stock index funds have been impressive, meaning even more feds joined the ranks of the self-made-millionaires club.

At the end of March, the number of both active and retired federal workers with $1 million plus accounts stood at 32,638, up from 23,098 in March 2018.

The vast majority of TSP millionaires are rank and file workers who’ve been investing an average of 30 years. Virtually all of them are heavily, or exclusively, invested in the federal 401K plans C and stock, large and small cap, funds. During the Great Recession, tens of thousands of TSP investors fled the declining stock market. Most moved some, or all, of both the then current accounts into the treasury securities G Fund. Many also stopped buying stock funds via payroll deduction during the period when shares were, in effect, on sale because the market was down. Some people still haven’t returned to the stock funds.

So how does your TSP account rank in the run to million dollar plus status?

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The most recent data from the Federal Retirement Thrift Investment Board, as of March 31 2019, shows there are 3.4 million Federal Employees Retirement System investors, 310,810 Civil Service Retirement System investors, 1.33 million from the uniformed military service and more than half a million in the military’s new blended retirement system.

The average account balance for FERS investors was $142,512 at the end of March. It was $150,467 for CSRS investors and $26,630 for the uniformed military services. Just over 1.4 million had tax free Roth accounts, with balances ranging from $20,778 for CSRS investors and $134,517 for FERS investors, to $9,006 for the uniformed military.

Most financial advisers say that people investing for a retirement that might not begin for 10, 20 or 30 years need to take a long-haul approach and generally ignore the short-term ups and downs of the stock market. It is also important to remember that retirement could last decades — maybe even longer than you actually worked. And that many people, especially those under the CSRS, may not touch their TSP accounts for years, if ever. For a long haul, rear view mirror look at the performance of the TSP funds, check these official numbers. Pay particular attention to the 2009 and 2010 returns for the C, S and I funds as the market started climbing out of the 2008 recession:

Here’s the official TSP guide to the actual performance of the C, S, I, F bonds and G funds, as well as the Lifecycle funds from 2009 to the end of 2018. To understand how the TSP calculates rates of return for any given period of time and determines compound annual returns, read the Fact Sheet.

Year G Fund F Fund C Fund S Fund I Fund
2009 2.97% 5.99% 26.68% 34.85% 30.04%
2010 2.81% 6.71% 15.06% 29.06% 7.94%
2011 2.45% 7.89% 2.11% (3.38%) (11.81%)
2012 1.47% 4.29% 16.07% 18.57% 18.62%
2013 1.89% (1.68%) 32.45% 38.35% 22.13%
2014 2.31% 6.73% 13.78% 7.80% (5.27%)
2015 2.04% 0.91% 1.46% (2.92%) (0.51%)
2016 1.82% 2.91% 12.01% 16.35% 2.10%
2017 2.33% 3.82% 21.82% 18.22% 25.42%
2018 2.91% 0.15% (4.41%) (9.26%) (13.43%)
10 Yr Compound 2.30% 3.73% 13.17% 13.67% 6.48%

Percentages in ( ) are negative

Nearly Useless Factoid

By Alazar Moges

Albert Einstein was offered the role of Israel’s second President but declined. Chain Weizmann, the first president of Israel, had been in poor health for several years and ultimately passed away in 1952. After his death, the Israeli government officially offered the post of presidency to then Princeton, New Jersey resident Albert Einstein, subject to a vote by the national legislature of Israel. The world renowned scientist turned the offer down citing his lack of experience at dealing with people.

Source: History.com

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