The TSP L Funds have had an average annual return of 6.8% or more for as long as they’ve existed. Image: jd8/Shutterstock.com
By: FEDweek StaffThe TSP has launched a web page showing the potential growth in accounts that, while aimed mainly at newly hired employees, is illustrative for all participants.
The page shows, for example, that $1 invested now would grow to $10 in 35 years—commonly, about the length of a career—at an average 6.8 percent rate of return. At that rate of return, it adds, the $1 would grow to $2.68 in 15 years, $5.18 in 25 years and $19.31 in 45 years.
While it carries the standard financial industry caveat that past performance is no guarantee of future performance, it notes that each of the Lifecycle L funds that were appropriate for participants younger than age 40 at their launch “have had an average annual return of 6.8% or more for as long as they’ve existed.”
The site also stresses the value of personal investing for employees under FERS—as all new hires are—by noting the dollar-for-dollar match on the first three percent of salary invested and the 50 cents on the dollar match on the next two percent invested.
“Once you’ve made your investment plan, stick to it, and only make changes after careful consideration. Remember that retirement investing is for the long term, and every dollar counts. Each time you get a pay increase, consider upping your TSP contributions through your electronic payroll system,” it says.
Other topics include how compound interest works; traditional vs. Roth investing; and the importance of keeping account information up to date.
In a message to agency officials, the TSP said “We encourage you to share the website and related resources during new employee orientations and other onboarding activities.”
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See also,
How to Handle Taxes Owed on TSP Roth Conversions? Use a Ladder
The Best Ages for Federal Employees to Retire
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