You are in the TSP for the long haul; continue to contribute as much as you can regardless of ups and downs. Image: Geber86/Shutterstock.com
By: John Grobe“There are three kinds of lies: lies, damned lies, and statistics.” This quote is attributed to Mark Twain and is frequently cited when warning one of the use of statistics to prove a point or make a sale.
Statistics, however, don’t tell you a thing about what the future holds. If you look hard enough, you can find a statistic to “support” anything or any point of view. Another of my favorite Mark Twain sayings about statistics is: “Many people use statistics in the same manner in which a drunk uses a lamp post; for support, rather than for illumination.”
However, statistics can serve as snapshots of a period in time. Here are some recently released statistics from the Thrift Savings Plan effective at the end of 2023.
The participation rate of FERS employees in the TSP is 95.9%, the highest that it has been in the last five years. This compares favorably with the 57% of private sector employees who participate in their 401(k)s in September of 2023 according to CNBC.
The deferral rate of FERS employees who participate in the TSP is 9.1%, also the highest rate in the last five years. Both traditional and Roth deferral rates have been climbing. This rate is not as high as the 13.9% deferral rate for those who participate in private sector employer sponsored defined contribution retirement plans found by Fidelity in a survey at the end of the 2nd quarter of 2023.
FERS loan usage was at its second highest level since 2019 with 8.3% of participants having an outstanding loan.
Hardship withdrawal usage, at 3.1%, was at its third highest level in the last five years.
These statistics do not purport to prove anything, they are just facts. However, when we take these facts and attempt to make predictions out of them, we venture onto dangerous ground.
For example, if you looked at the FERS participation and deferral rates (both are at their highest level in five years), you might be tempted to say, “If the present rate of increase were to continue…” and make predictions. One thing we have learned over time is that present rates of increase, or decrease for that matter) tend not to continue for long periods of time.
So, what should you do when presented with statistics? First and foremost, take them with a grain of salt; do not assume that a statistic has any predictive value.
Second, develop your own strategy, perhaps with the assistance of a financial planner.
Third, realize you are in the TSP for the long haul; continue to contribute as much as you can regardless of ups and downs. And finally, remember the quote that has been attributed to Yogi Berra, Mark Twain, Niels Bohr and others: “It’s difficult to make predictions, especially about the future”.
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See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
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