So you’ve got $1M in the TSP. Now what?

5,649,736 — that’s the number of active and retired feds who do not have at least $1 million in their Thrift Savings Plan account. That’s the real story, the real number, even though the media (guilty!) seems focused on the 84,808 workers and retirees who do have accounts ranging in value, as of March 31, from $1 million to $9.3 million.

And especially the millionaire population boom since March of 2020, when there were 27,212 in the club. Or since 2011, when there were only 208 TSP millionaires. So we checked.

Last week I talked with, contacted or heard from six TSP millionaires: One in Pennsylvania, one in Florida, one in California and the rest in the D.C. metro area, which includes parts of Maryland and Virginia. All said they read stories about the TSP with interest and wish more of their coworkers would spend less or no time trying to time the market. Nobody wanted his (all were men) name used. Some said reaching millionaire status caused them to relax and rethink their careers, and life in retirement. Two said they were taking better care of themselves. The consensus was that having a million-dollar nest egg — in addition to a guaranteed-for-life, linked-to-inflation monthly payment from the Federal Employees Retirement System and Social Security — is a very good thing. And it’s something nobody expected when they joined the civil service. Several had advice. Here are a couple of their comments:

“I enjoy your columns … about how people made it to the TSP millionaires club. Here’s my story: I’ve been reading your columns for years, and I always enjoyed your sharing of wisdom when it comes to those in the 7-digit big club. You can share my story on how I got there, but just call me.” -James out West

“I got into civil service back in 1996. Married two years with one-year-old daughter … I knew I had to start saving early. So when I was looking at options I did two things: I started a mutual fund, where I could start with $50 per month and save for a rainy day. And second, I did 10% with the TSP.

“The TSP was split about 50% in G fund and 50% in C fund. Being kind of young and not really that money smart, I figured the high risk stock fund was offset by the assurance of the G fund (and it’s whopping 1%-2% return). I was overseas, and my starting salary was around $29K per year (GS-09). Not that much to live on but we were young and really didn’t spend much money. So this was OK for the first few years. Then in the very early 2000s, I changed my mix and added more stock, so I was 70/30 stock to G fund and I raised my input as was allowed at that time to the maximum, I think 14%. I figured that this was money I didn’t need to worry about or touch. Yes, we cut coupons, but never went without.

“A few years later, I went big: C and S funds exclusively. Maxed out contributions. In 2008-2009 when the stock market took a nose dive (and I lost easily half of my TSP) I didn’t get upset. I merely looked at it as a grand bargain and just kept buying. Fast forward to pre-pandemic times (2016-2020) and I was still in for 16% of my salary and I’m now up to (six figures for salary). I saw in the early spring of last year my account nosedive by about $300,000. That is a lot of money to lose. But like 2008 I just kept my allocation the same and drove forward.

“I’m now well over $1.2 million and it’s still going, with four to five years to go from retirement. Living overseas for the vast majority of my civil service time was a boon, as I was also able to use that small mutual fund (I gradually increased my contributions to that) to put down a down payment on a house upon returning stateside and fund two kids for 7-and-a-half years straight paying for college. I was fortunate to not have to touch my TSP in all of this time. My timeline for retirement has me finishing up with about 40 years of federal service (nine years active, paid back) but under 60 so my wife and I can enjoy some of this time while we’re healthy.

“The lesson to those that are wanting to be impatient, trying to sell during the highs and buy during the lows: This is not a race with Usain Bolt. Even the best on Wall Street don’t win this game too often. This is the long game. You can invest in the riskier portfolio early, but the key is to maximize your contributions no matter how you invest. Also, have a secondary investment [and] savings so you can have money when you need it. It was a life changer for me. Thanks.” -James In Virginia

“You’re fascinated with the millionaire story but it’s not everything. I’m also a millionaire but that’s not nearly important as my health and treating others respectfully.

“I nearly died a year ago due to sugary drinks and food. I have a whole new perspective. What would all my money mean if I was six feet under? The masks are here to stay and traveling is not a good option due to the pandemic. All our lives have changed for the worse. COVID-19 deaths are soaring across the globe with many strains. There [are] so many more important stories to address. I hope you change your approach.” -E in California

Nearly Useless Factoid

By Alazar Moges

The Rubik’s Cube was invented in 1974 when Hungarian architect Ernő Rubik wanted to create a 3D movement model for his students. After months of fiddling with cube blocks made of wood and paper, he ultimately created what was then known as a “Bűvös kocka,” or Magic Cube. Later renamed, the Rubik’s Cube went on to become the most popular to puzzle in the world.

Source: Smithsonian Magazine

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THRIFT SAVINGS PLAN TICKER

Oct 19, 2021 Close Change YTD*
L Income 23.2805 0.0341 3.52%
L 2025 12.0833 0.0345 6.40%
L 2030 42.8438 0.1673 7.92%
L 2035 12.8892 0.055 8.58%
L 2040 48.8603 0.227 9.26%
L 2045 13.4055 0.0665 9.83%
L 2050 29.4133 0.1556 10.41%
L 2055 14.5327 0.0961 12.65%
L 2060 14.5326 0.0961 12.65%
L 2065 14.5324 0.096 12.65%
G Fund 16.6854 0.0007 0.99%
F Fund 20.8070 -0.0522 -1.40%
C Fund 68.0320 0.5004 15.90%
S Fund 86.9354 0.4118 11.66%
I Fund 39.2478 0.2573 8.56%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.