One GS 5's roadmap to a $600K TSP account
By Mike Causey
February 2, 2018
She started at the National Institutes of Health in 1991 but couldn't start investing until 1992. As a GS 5, step 1, pulling down a whopping $21,796 that year. She didn't know much about investing in general or the relatively new Thrift Savings Plan in particular. Except that it looked like a good deal even for someone earning a relatively low salary and decades away from retirement. At that time, feds had to wait six months after they were hired to sign up for Uncle Sam's 401(k) plan.
Today, she has more than $600,000 in the TSP. She obviously knew, or very quickly learned, a lot about both the investing and the TSP.
In her first year as a TSP investor, she split her contributions 50/50 between the large cap stock indexed C fund and the bond-index F fund. She dropped the F fund in a couple of years and added the small cap S fund.
"Once the L fund came into being, I tossed all the money in the 2040 (the then most aggressive) of the self-adjusting lifecycle funds. As soon as the 2050 fund opened up, I transferred some money ($10,000?) into it and have been investing in it ever since" — even though she is anywhere from 12 to 20 years away from retirement.
| Year | SNN Wages | Taxable wages | Net Take-home | My FERS | TSP | Base |
| 1992 | $21,796 | $20,936 | $14,475 | $61.75 | $1,826.19 | $19,713 |
| 1993 | $25,034 | $22,972 | $16,378 | $209.79 | $5,257.04 | $21,374.4 |
| 1994 | $24,372 | $21,936 | $14,483 | $380.77 | $8,928.12 | $24,372.8 |
| 1995 | $26,291 | $23,662 | $15,873 | $575.67 | $16,082.1 | $26,291.2 |
| 1996 | $30,084 | $27,118 | $18,115 | $1,023.14 | $23,578.97 | $29,664.8 |
| 1997 | $32,384 | $29,190 | $19,721 | $1,278.74 | $35,031.93 | $31,943.2 |
| 1998 | $34,408 | $31,774 | $21,243 | $1,549.18 | $49,912.62 | $33,811.2 |
| 1999 | $37,013 | $33,397 | $22,366 | $1,925.55 | $66,438.99 | $36,159.2 |
| 2000 | $38,263 | $34,400 | $23,180 | $2,387.2 | $65,767.17 | $38,639.2 |
| 2001 | $40,536 | $34,568 | $24,776 | $2,723.38 | $64,089.38 | $40,536 |
| 2002 | $47,403 | $40,379 | $31,726 | $3,069.26 | $56,615.91 | $43,235.2 |
| 2003 | $49,297 | $43,351 | $35,277 | $3,434.14 | $83,077.79 | $45,609.9 |
| 2004 | $52,670.20 | $45,604 | $37,329 | $3,837.91 | $103,110.09 | $50,476 |
| 2005 | $51,198 | $42,822 | $34,958 | $4,284 | $122,733 | $57,906.4 |
| 2006 | $51,896.58 | $41,444.58 | $33,495.65 | $5,074.29 | $157,634.38 | $59,432 |
| 2007 | $53,061.6 | $46,561 | $37,499.8 | $5,569.76 | $176,959.73 | $61,934.4 |
| 2008 | $54,724.51 | $46,479.81 | $35,979.63 | $6,095.11 | $132,150.15 | $65,640 |
| 2009 | $59,146.52 | $48,646.52 | $36110.38 | $6,653.4 | $182,063.47 | $69,777.6 |
| 2010 | $62,982.86 | $52,932.86 | $38,703.55 | $7,233.73 | $222,413.86 | $72,459.2 |
| 2011 | $65,700 | $56,850 | $46,793.99 | $7,283.15 | $232,273.11 | $73,673.6 |
| 2012 | $66177.04 | $59,437.03 | $48,546.45 | $279,563.32 | $76,213.6 | |
| 2013 | $68,630.46 | $67,900.46 | $46,878.69 | $356,122.4 | $74,713.6 | |
| 2014 | $71,211 | $67,929.28 | $48,539.28 | $388,621.47 | $77,414.4 | |
| 2015 | $77,701 | $65,231.33 | $46,012.48 | $408,425.35 | $85,529.54 | |
| 2016 | $76,449 | $64,020.5 | $46,854.4 | $459,014.57 | $83,715.2 | |
| 2017 | $80,999 | $62,206.13 | $44,547 | $563,311.02 | $86,081.6 |
As you can tell from the chart she supplied, she contributed less in some years due to "life, illness, bills" and family job changes. "It's wonderful to be able to put money away for retirement, but not paying current bills isn't a prudent course of action," she said. Financial planner Suzanne Orman, a big fan of the TSP, would agree.
Most financial experts say the stock market is long overdue for a major correction, where stocks may drop 30 percent — or more — in value. What about that?
"Whenever the stock market took a big swoon (in the 1990s and of course in the Great Recession of 2008) I tried to increase my contributions," she said. She told herself that rather than being down "it's on sale. I would sniff into my 401(k) (as in kaput) account statement. Yes, I know it's technically the TSP, but I like the term 401-Kaput. Everyone understands the reference."
She says she may have to pull back this year because of a potential family crisis. Cross your fingers for us.
"I would LOVE IT if Congress got rid of that stupid proportional distribution rule," she said. "If they did, I would contribute more to my Roth funds while gritting my teeth. Plus the reason for the two 2040 and 2050 Lifecycle funds is that there will be more time when we need to spend in retirement, so the kids will have legacy accounts that match more closely with their projected lifespans. Or grandchildren if any appear on the horizon."
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