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Thread: Promo to stop TSP withdrawal at retirement

  1. #13

    Default Re: Promo to stop TSP withdrawal at retirement

    I don't think any of this stuff gets changed while most of us are living, given the current policy environment and expectations it will continue. So, my argument with TSP is for action on programs that they can actually change. What I really want to see is a change in auto-enrollment method and investor education. As I understand it from previous assessments, only a small percentage of TSPers actually take any time to educate themselves, think about allocation, and think about maximizing contribution. I'm not saying everyone should be like people on this board, attempting to time the market, unless they have lots of time to get smart on it and pay attention. Let's be real. We may say, "Friends don't let friends buy and hold," BUT ... about 80% of those on the tracker regularly underperform the C-Fund buy and hold approach. SO, theoretically to me, the overwhelming majority of TSPers would probably be better off dumping cash into Lifecycle Funds on a Dollar-Cost Averaging (DCA) approach.

    Anyway, that's not what I'm referring to really, with regard to policy change. What I'm talking about is that the U.S., both federally and in corporate sector, has really switched over to defined contribution over defined benefit, especially by comparison with other developed nations. Whether or not you have something to help you live at a reasonable standard of living after retirement has now been pegged almost entirely to how you perform in the stock market. That would be all well and good if everyone was actually investing in the stock market, DCAing in money over the course of 50 years, educating themselves about allocation and so on. But they are NOT. A lot of 401k people, and especially TSPers, get enrolled automatically. However, they are auto-enrolled in G-Fund or equivalents, not in a stock fund, and they likely don't ever get close to maxing out IRS contribution limits. They get enrolled in a G-Fund, they set up automatic deposits to the matching fund level, then they forget it for the rest of their career, unless they get a good mentor and wake up at some point along the way. If they don't they probably retire with something like $300,000, all while a lot of financial advisors are suggesting something more like $3-4 million.

    The TSP needs to do two key policy things in my opinion, which they may or may not be able to do with congressional approval:


    1. Automatically enroll new employees in Lifecycle Funds suitable for a timeline where they retire at 70.
    2. Significantly ramp up education efforts, especially stressing:
      • As you earn more money, invest more of it.
      • If government can't auto-enroll people in L-Fund because of regulations preventing them from exposing people to risk without consent, then ramp up education to emphasize the importance of being exposed to stocks early in life and dollar cost averaging through good times and bad.
      • Annual check-ups with a CFP, provided at government expense.


    If the feds and corporations are all going to pin retirement income to performance in equities, then you have to think of getting them into the best fund options as a cost savings measure for America. If a large percentage of Americans aren't saving enough for retirement because they are sitting in G-Fund equivalents, then taxpayers are going to be shucking out a ton of cash to support them later in life when they can't do it on their own.

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  3. #14

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    Default Re: Promo to stop TSP withdrawal at retirement

    You may have missed this:
    https://www.tsp.gov/whatsnew/Content/index.html#lfund
    L Funds: The new FERS default investment — (September 5, 2015) Beginning on September 5, 2015, the default investment fund for newly enrolled civilian TSP participants and new beneficiary participants will be an age-appropriate Lifecycle (L) Fund.This change is in accordance with Public Law 113-255, the Smart Savings Act, which the President signed into law on December 18, 2014.

    PO

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  5. #15

    Default Re: Promo to stop TSP withdrawal at retirement

    Quote Originally Posted by PessOptimist View Post
    You may have missed this:
    https://www.tsp.gov/whatsnew/Content/index.html#lfund
    L Funds: The new FERS default investment — (September 5, 2015) Beginning on September 5, 2015, the default investment fund for newly enrolled civilian TSP participants and new beneficiary participants will be an age-appropriate Lifecycle (L) Fund.This change is in accordance with Public Law 113-255, the Smart Savings Act, which the President signed into law on December 18, 2014.

    PO
    Nice. Took them long enough. Wonder if they'll be able to convince others currently enrolled to do the same. I think I remember seeing somewhere that since the 2009, more than half of all TSP accounts have been in the G-Fund, and hence have missed the incredible gains over the last 6 years.

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  7. #16

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    Default Re: Promo to stop TSP withdrawal at retirement

    Quote Originally Posted by James48843 View Post
    I want to know...how much TSP SHAREHOLDER MONEY is being spent trying to convince people, (who make their own informed choices,) NOT to move their money out where they have more flexibility.

    Am I paying for that crap advertising?
    "Careful what you wish for." There's a way to go about things.

    I believe the last uprising against the TSP didn't go so well. It takes much more work than basic protesting in this sort of situation--if one is really and truly serious and committed to changing things; and changing them safely, without making things worse (off the top of my head, A potential TSP response: "OK, you don't want us to cover expenses via advertising payback; we'll just attempt to increase your fees--no problem. [Or we'll cook the books even harder on the I-fund--no problem"]). IMHO.

    [COLOR=#0000ff][FONT=comic sans ms][I]"In the land of idiots, the moron is King."--Unknown[/I][/FONT][/COLOR]

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  9. #17

    Join Date
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    Default Re: Promo to stop TSP withdrawal at retirement

    Burro: Perhaps a class action lawsuit would be the correct tool to get changes implemented. However, in my opinion, Feds would need a single organization (like NARFE) to be willing to take point. They know DC, the politics, etc. and how to leverage a suit into meaningful results. There are many needed changes.

    FS
    FogSailing
    Try to learn something about everything and everything about something.

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  11. #18

    Default Re: Promo to stop TSP withdrawal at retirement

    in all honesty, i am not a big fan of lawyers, you can only trust them as far as you pay them, and i'm pretty sure our tsp pockets aren't the deepest. there are dogs, and then there are bigger dogs, this is a very important lesson to learn in life. when you're a dog, it is not always so productive to test the limits of your chain, instead get happy in your kennel. the self-dealing cheats will pay in the end, that is what the next holiday is all about.

    as far as this holiday goes, i am thankful for:

    * 2 trades per month digitally with confirmation (most times) instead of snail mail requests.
    * 5 funds to choose from instead of just cash (even though f and i are rigged daily), buyer beware.
    * that i am currently at 8% despite completely blowing august and september and taking a big kick to the retirement nuts as well as missing some gravy in November.
    * that my mother-in-law is not coming over for dinner.
    * that i don't even have a mother-in-law (told you i hate lawyers, once was enough).
    * my relative health and every day that i draw breath.
    * boobs (gotta have a hobby).

    happy thanksgiving all.
    100g


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  13. #19

    Default Re: Promo to stop TSP withdrawal at retirement

    i logged in to check my tsp.gov account and saw the big red "keep your money in tsp after retirement" add. they were kind enough to offer me a survey at the completion of my website visit so i told them what i thought in the "suggestions" box:

    ----------

    "Offer real-time trades like a regular brokerage retirement account instead of 12:00 noon ET cutoff 4 hours before the market closes, how do you expect someone to buy something without knowing at the time of the transaction what the price is?

    Offer unlimited trades like a regular retirement brokerage account instead the 2 IFT's per month, investors should have access to their money and available investment funds at all times. Many private brokerages offer these services with a wider variety of funds at competitive or lower administrative costs than TSP.

    Hold individual investor's funds in trust to be accessed only by them, it is disconcerting that whenever the federal government runs into budget uncertainty that the U.S. Treasury 'borrows' from the G fund pool as a short term stop gap measure to pay the current credit card bills. How is this reconciled with the concept of fidicuary duty? That is a crime in any other private sector scenario.

    The above limitations make the tsp an unwieldy, restrictive, and inflexible trading platform that hampers an account holder's ability to make timely and accurate decisions regarding their retirement funds.

    I will be taking my funds out TSP.gov upon retirement and rolling them over to my private brokerage."

    ----------

    i doubt they will read it let alone do anything about it, but if they do and decide to reply to me i expect the answer to go something like this:

    tsp: the tsp funds seek to mimic the indices they represent and are not actual investment funds with real time prices, it takes time to administratively adjust account values by the end of the trading day (me in my head: so my tsp is invested in fantasy paper not real paper?)

    tsp: trades are limited to keep costs down (me in my head: but costs have increased dramatically since instituting this rule! and private options have lower costs and more freedom.)

    tsp: tsp investors have never lost money in the g fund, all monies have been replaced with appropriate interest (me in my head: great, that is like my brother telling me he used my girlfriend over a long weekend trip but brought her back safely so she is still there when i want her?)

    tsp: we are constantly working to improve the investor experience and tsp.gov is one of the best employer sponsored retirement vehicles available (me in my head: well, you just keep working on that then there einstien because it looks like you're going backwards to me.)
    100g

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  15. #20

    Join Date
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    Default Re: Promo to stop TSP withdrawal at retirement

    I also took that survey and suggested similar things Burro. Everyone who is an active or retired Fed should take the 5 minutes needed to give these folks some feedback. At least they won't be able to say they didn't know what their customers thought.

    FS
    FogSailing
    Try to learn something about everything and everything about something.

  16.  
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