Your TSP million could outlast their Powerball billion

The stock market has driven down the number of federal employees with at least a million dollars in their Thrift Savings Plan accounts.

It wasn’t me. It wasn’t you either.  But someone won that $2 billion Powerball ticket. We could know the balance of power in Congress before learning the name of that lucky Californian. Maybe it was a group of ticket-buyers. Be honest, isn’t it fun to fantasize about how judiciously you would handle that sudden fortune?

You likely already know the oft-retold stories of misery that descends on jackpot winners. Some go broke in astonishingly short times. Some move to snooty neighborhoods, only to be shunned by old-money neighbors. Some end up divorced and lose their friends. Worst of all, a few have taken their own lives.

Yes, it’s no joke. Money actually can ruin a person. On the other hand, to quote the milkman Tevye, “It’s no shame to be poor… but it’s no great honor either.”

Which brings me to the fact that the number of federal employees with a million dollars in the Thrift Savings Plan accounts has fallen from its peak of nearly 113,000 in December 2021 to 65,494 this past September. Many of the former “millionaires” no doubt dropped into the $750,000 to $999,999 category. One indicator of the tough stock market.

No investment advice here. I’m in the same boat. TSP is a well-managed system and has accessible tools for doing what you think is right. Just don’t sell low and buy high.

The term “TSP millionaire” fails, in my opinion, to covey the real meaning of having this sum, or more or less, in a 401K-type savings account. Millionaire used to mean rich. But that was back in the Beverly Hillbillies days, when you could buy a new brick home for $10,000. Today, by some estimates, more than 20 million Americans have a net worth greater than $1 million.

The real question, and why your 401K matters so much, is whether that principal investment will produce sufficient returns such that your minimum required withdrawals accomplishes two things:

  • Preserves your capital
  • Gives you enough cash that, when combined with other sources of income like Social Security, you have the financial basis to maintain the lifestyle you want.

I call this middle-ground rich.

Basically, rich means money works for you, rather than you working for money. I had a wonderful boss many years ago who had earned real wealth. I mean mansion, housekeeper and groundskeeper wealth. She liked working, but once said her main job was “keeping my interest rate up.” She turned down the company-provided Ford because she preferred driving her own Lincoln Town Car. My loaded company Taurus replaced an old, rusty Oldsmobile coupe with crank windows and no a/c. (It seemed odd to me, but she refused to shell out the difference for first class when on company travel. “The front of the plane gets there the same time as the back,” she’d sniff.)

Winning the lottery, inheriting some crazy sum you never counted on, or actually earning that level of wealth though hard work or super-savvy investing, you end up with money working for you. Presuming you don’t blow it on houses, cars and gifts to grifters who come out of the woodwork.

At the other extreme lie people who, alas, must work into old age to remain housed and fed.

In retirement, then, you may not realistically aspire to a level of wealthy living you never had before, but neither do you want to feel forced to work at the local hardware store. In retirement you enter that state where money has to work for you, because you no longer want to work for money.

TSP millionaires may not have a million dollars to spend, but the figure provides a round-number benchmark from which it’s easy to calculate what your yearly withdrawal might look like. At the least, you want two bucks at the end of the month for a Powerball ticket.


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