Nurturing your TSP with the green stuff
By Mike Causey
June 28, 2016 1:00 am
Last week we heard from a D.C.-based fed who commented on the column about the Thrift Savings Plan's 418 home-grown, self-made millionaires. He said he wanted to be one of them, and is well on the way.
All of the 400-plus feds had a few things in common: They had all invested from the start of the TSP. And they apparently regularly invest during good and bad market times. When it was a bull market they "made" money, on paper. When it was a bear market, and during the Great Recession, they "lost" at least on paper. But those who stayed the course and continued to invest during the market slump saw their account balances rise in a big way in recent years.
The man with the million-dollar-plan started as a VA janitor ($7 per hour), then joined the Marine Corps, where as an officer he started at $18,000. In the mid-90s he joined the government as a GS-12. He was and is a regular TSP investor. His current account balance is $684,000. He said his deposits to the TSP over 20 years amounted to $336,000. The other part of his TSP account, $348,000, is growth or interest. So after 25 years of steady investing he is in sight of a $1 million account.
After the column, he contacted me with this very interesting postscript, which, again, shows he's a pretty sharp planner and investor. This is what he said:
"This is probably too complicated to explain to the readers and they may be uninterested. But while I was a federal employee I invested in Roth IRAs because I didn't have any other 401K or TSP while in college, law school and the Marine Corps. Those Roth IRA deposit limits started at $2,000 back in those days. Those Roth IRAs are now worth just over $100K. If that money was in the TSP plan, I would be much closer to that million dollar club. I know I would already be sitting on over $800K. But eventually it will all add up.
"Another tidbit of information is that I also started depositing all my TSP money into the new Roth TSP. I love the Roth TSP and hope the TSP will start letting me roll my investments from regular TSP to Roth TSP even though it means I will pay taxes on the roll-overs-conversions. Then I can retire and let it grow until I die without a requirement to withdraw money. Hopefully, I will then get another 30 years or more of growth. " He asked not to be identified, so let's just call him Semper Fi
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