Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.
ARCHIVES

Advice From a TSP Millionaire

As we continue to celebrate Financial Literacy Month, I’ve been thinking about a column I wrote in February about one of the Thrift Savings Plan’s newest millionaires, Jim, who had just achieved a seven-figure balance in his TSP account and was getting ready to retire from his federal job. Now that he’s retired and has a little more time on his hands, Jim recently wrote to me to offer some insights on his method of achieving financial security. I have a feeling some of you may have additional tips to add to his list.

Here are his words of wisdom and my two cents:

I generally spend two to four hours on managing our investments most weeks. When I am making changes to or buying new stocks, mutual funds, Exchange Traded Funds or other investments, I can go on for four to eight hours for that week. In addition, for entertainment I do watch CNBC and other investment programs.

I think it’s interesting that Jim listed the time he dedicates to managing his investments as his first tip. It appears to be an enjoyable activity for him and he devotes substantial time to it. I know ...

The 5 Percent Solution to Retirement Security

It’s April, and that means warmer temperatures are finally here and it’s time to plant flowers. It also means it’s time to consider your financial literacy. For more than 10 years, April has been officially designated as Financial Literacy Month in the United States. (Maybe that has something to do with the April 15 federal tax deadline.)

The website dedicated to this effort to educate Americans on personal finance and goal-setting features a 30-step program -- one step for each day of April -- designed to help users target areas where they might need additional education and assistance to achieve financial “wellness.” Each step comes with links to quizzes, blogs and other useful information.

There’s no better tool for federal employees to control their financial security in retirement than the Thrift Savings Plan. This month, the TSP is introducing a new initiative called “Take Five for Your Future.” It emphasizes that saving 5 percent in your TSP results in 5 percent agency automatic and matching contributions. It also notes you have five funds to choose from for investing your retirement nest egg (along with five life cycle fund options), and notes that taking five minutes to make a ...

What Happens to Your Life Savings?

Some people might think that if they time it just right, they’ll spend all the money they’ve saved for retirement and die penniless. But more often than not, this is not the case. And that’s actually a good thing, don’t you agree?

Before we had the Thrift Savings Plan and other similar types of retirement savings programs, the average American worker didn’t have to worry much about estate planning and a good many -- especially those who needed expensive long-term care -- did use up all of their money before they died. My dad was one of them. He and my mother lived out their retirement years beginning in 1980 on a modest Teamster’s pension (with no cost of living adjustments) and Social Security retirement. They had a minimal amount of savings that they hoped would ultimately pass on to their grandchildren.

Unfortunately, after my mom died in 1996, my dad needed to be cared for in a nursing home for the last two years of his life. By the time he died in 1998, he had qualified for Medicaid and had less than $2,500 in the bank. My dad retired before his company offered ...

Is Paperless Retirement Processing the Answer?

Advances in technology are improving our lives every day. But when it comes to federal retirement benefits processing, there’s a long way to go. New retirement claims are still being processed manually with paper retirement application forms and printed documentation of federal service records. The result is long delays and big backlogs of unprocessed claims.

Now there’s a glimmer of hope, as the Office of Personnel Management last month introduced a plan for modernizing information technology at the agency that includes advances in retirement processing.

OPM’s plan notes that a variety of changes already are taking place under mandates in laws or regulations. These include:

  • Conversion of all retirement payments to electronic fund transfers.
  • Updating annuity calculators to factor increased retirement contributions for certain federal employees, to include phased credit for unused sick leave for those under the Federal Employees Retirement System, and to account for voluntary Roth contributions.
  • Numerous updates to existing calculators or support systems to automate complex business rules.

OPM plans to replace the archaic retirement processing system with a paperless approach that will authorize accurate retirement benefits on the day they are due, answer customers’ questions in a timely manner and promote self-service ...

Retirement Quiz: The Basics

It’s quiz time! I’ve designed this one to cover some of the basics, with relatively new federal employees in mind. But midcareer and pre-retirement age federal employees may also find they have a few things to learn.

  1. There is no minimum age to make contributions to an Individual Retirement Arrangement.
    1. True
    2. False

  1. Which of these is a type of retirement savings plan:
    1. IRA
    2. 401k
    3. TSP
    4. 403b
    5. SEP
    6. MyRA
    7. All of the above

  1. The word “vested” relative to a particular retirement benefit means:
    1. It belongs to you; you have the full and legal right to this benefit.
    2. You are not yet entitled to receive the full benefit.
    3. It is the sleeveless layer of your retirement plan.

  1. The money you contribute to the TSP, along with the matching government contributions, is immediately vested.
    1. True, however, there is a three year vesting requirement for the 1 percent agency automatic contribution.
    2. False, it takes three years for your TSP account to be vested.

  1. What is the minimum number of years of service required to qualify for a federal retirement benefit?
    1. Three
    2. Five

  1. An annuity is a term used to describe a fixed income stream paid over a specific period of time, usually ...