TSP millionaire population boom
By Mike Causey
March 26, 2018
The number of federal workers and retirees with million dollar-plus Thrift Savings Plan accounts has exploded from 3,272 in January 2016 to 23,962 as of Dec. 31.
In August 2017, 16,475 people were TSP millionaires. Many have been investing since the TSP started in 1987, and the current crop of millionaires has been investing for almost 29 years.
Although found at many grade levels and in nearly every agency throughout the country, all of the people in the million-plus column have the same things in common: they have invested for the long haul, and invested heavily or exclusively in the stock-indexed C and S funds. When markets drop dramatically — as they did in 1997 and during the Great Recession — they continue to purchase stocks getting more shares each pay period because they are investing the same amount of money, which purchases a larger share of the C and S funds.
Also, all of those eligible for it have taken advantage of the total 5 percent match available from their agency.
"During the last 6 months, I was over $1.5 million and 100 percent G-fund (treasury securities)," said one self-made TSP millionaire, referred to here as Mr. A. "I decided to work another two years and because the Dow-Jones dropped 2,000 points, I saw an opportunity to buy low and now I am 100 percent in the C-fund."
In the beginning there were only a handful of TSP millionaires. All of them were well-to-do-outsiders, such as lawyers named to be federal judges, who brought their private sector accounts into the TSP because of its low-administrative fees and high-level of oversight.
By some counts, half the members of Congress are millionaires and most of them are in the TSP. But over the years the self-made millionaires outpaced the elected and appointed officials who brought their first or second million with them.
Experts say that for Federal Employees Retirement System employees, the TSP will supply anywhere from one-third to one-half of the money they have to spend in retirement. But you gotta have it to spend it, right?
So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
- 1,458,820 had accounts valued at between $50,000 and $249,000
- 453,353 had accounts ranging between $250,000 and $499,000
- 148,271 had between $500,000 and $749,000
- 54,735 had accounts worth between $750,000 and $999,000
- 23,962 had $1 million or more
Some have multi-million accounts which the vast majority did the old-fashioned way. They invested, did not panic when the market crashed, took advantage of the government match and stayed the course over decades — through good times and bad.
And of course, they took advantage of that 5 percent match which is the equivalent of a tax-deferred pay raise.
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