Retirement & Financial Planning Report

A worthwhile goal: A million-dollar balance in your TSP, if handled properly, will do a lot to help take care of these three common situations in retirement. Image: namtipStudio/

There are approximately 117,000 Thrift Saving Plan (“TSP”) Millionaires. They make up about two percent of approximately 6.9 million active TSP participants. This is an elite club of employees who have worked a 25–30-year federal career. And they consistently contributed to their TSP accounts, and they invested aggressively to reach this important milestone. In summary, if you earn at least 50,000 dollars per year and if you contribute at least five percent of your salary so that you can receive the employer matching of five percent and invest aggressively, you can achieve this million-dollar status before you retire after a 30-year career.

I understand and sympathize that many active employees reading this simply do not have the salary to make contributions because they live in expensive cities such as New York City and San Francisco and many have other financial hardships as well.

But why is it important to become a TSP Millionaire? I hope to explain the three critical reasons to address why you should work hard to achieve this million-dollar status before you retire. You would be faced with one, two or all three of these scenarios in retirement. A million-dollar balance in your TSP, if handled properly, hopefully will take care of these three situations.

1.   You may need to supplement your income in retirement.

Let us assume you receive a monthly FERS annuity and a monthly Social Security payment. What if both of those monthly payments do not cover your monthly expenses? How will you pay your bills each month? If you are a TSP Millionaire, you can make a monthly withdrawal to supplement your monthly income and make up the difference.

2.   How will you pay for your Long-Term Care needs?

If you are fortunate to reach your late eighties or early nineties and you may need to be in a Long-Term Facility such as an Assistant Living Facility or a Nursing Home. How will you pay for these types of facilities? Presently, nursing homes range from 75,000 to 150,000 per year. Both of my parents had to be placed in a nursing home because they needed round-the-clock nursing care. Your TSP can pay for your Long-Term Care needs for you and your spouse.

3.   During your retirement, you never want to run out of money.

In retirement, you will be spending more. Such as traveling, restaurants, golf, remodeling your home, spoiling your grandchildren. The expenditures are unlimited in nature, and you never know what the future can bring.

If you retire at age 62, you can start collecting your FERS annuity and Social Security. If you withdraw 30,000 dollars per year, your million-dollar TSP balance will last 33 years. And, if you invested in it very conservatively during those 33 years, your TSP balance will still be significant at age 95.

Consult with a professional to address some or all these issues.

Abraham Grungold is a retired federal employee with 36 years of federal service – including with the USPS Inspector General, the VA Inspector General, the US Dept of Justice, and the US Dept of Labor.  Through his company AG Financial Services he helps federal employees with their TSP and federal retirement planning and decisions. Mr. Grungold has written over 50 articles regarding the TSP and FERS retirement and been a guest on several podcasts with the Federal News Radio and Government Executive Magazine.

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