TSP

John Grobe

Oops, we missed it. April was Financial Awareness month. The good news is that financial awareness is something that we can (and should) practice every day. It’s important to us for our own good (e.g., we save for important events like retirement, our children’s education, a new home, etc.).

Even the Office of Personnel Management recognizes the importance of financial awareness, though they refer to it as “financial education”. Benefits Administration Letter 11-104 instructs agency human resource professionals on what would constitute an “Agency Retirement Financial Education Plan”. In 2015, a Government Accountability Office (GAO) forum suggested that employers include education in such areas as everyday budgeting and money management to their financial education menus.

ADVERTISEMENT

Many federal agencies have been providing financial education to their employees in the form of pre-retirement seminars for many years. When I began working for the Department of Treasury in 1980, they had a long-standing requirement (reflected both in the agency’s manual and in the negotiated labor agreement) that a pre-retirement seminar must be offered annually to all employees who were within five years of retirement. Offering is not the same as requiring, and some employees, though certainly not readers of FEDweek’s TSP Investment Report, will be like the horse that we led to water but who would not drink.

Requiring that retirement seminars be offered to those near the end of their career is a good starting point but, to be realistic, financial education needs to begin much earlier in an employee’s career. This is especially true with the FERS retirement system and how important the Thrift Savings Plan is to a comfortable retirement; it’s almost impossible to have a satisfying retirement without the money provided by the TSP, and, if you don’t start saving early, you’re at a disadvantage.

In a 2015 report, OPM stated that 97.5% of agencies that submitted a report to OPM on their financial education plans (39 of the 40 respondents) conducted pre-retirement seminars of some type for their employees. What if your agency does not provide financial literacy education, or what if what it provides is inadequate? Contact your HR office and inquire what types of education they do provide in this area. Suggest to them that April of 2022 would be a great time to kick off a financial literacy initiative; that’ll give them a lot of time to plan.

OPM does suggest that any retirement educators (e.g., financial planners, estate planners, etc.) be prohibited from any sales related behavior, such as offering “free consultations’ or “retirement analysis”. OPM specifically states that outside speakers not be allowed to promote products or services, distribute any business cards or similar information, or claim that they are endorsed by the agency or the federal government in general.

All of you who are reading this article are to be commended for taking extra steps to improve your level of financial and retirement knowledge. In addition to the bi-weekly TSP Investor’s Report, FEDweek issues a weekly Retirement and Financial Planning Report and, of course, there’s the original FEDweek Weekly Newsletter.

What it Takes to Be an Average Retiree

Calculating Service Credit for Sick Leave At Retirement

Don’t Overlook How Taxes Erode Retirement Income, Report Says

What it Takes to Be a TSP Millionaire in Today’s Dollars
With a long enough timeline, involving consistent large contributions and decent long-term stock returns during the period, it’s possible to become a millionaire from compounding a middle-class or upper middle-class income, including most jobs in federal service.

Yes It’s OK to Spend Your TSP in Retirement

TSP Investors Handbook, New 7th Edition