Are TSP Goals Achieved

[Ed]

When I switched from CSRS to FERS in 1987, my realisticprojection was to hit $1M in TSP by age 50. The recent bear market shattered that projection. With the risk of sounding personal, is anyone out there close to the $1M mark?

Ed

[Mike]

If I was close to $1,000,000 after 2 years of federal service, the IRS would surely know about it. :shock:

[jgpalmerdds]

Same as Mike, only been in TSP one year. I'm 1/5th of the way there in all my funds, though. It's only on paper. Long, long way to go.

[tsptalk]

Unless your salaray has been like $200,000 since the late 80's I don't believe it would have beenpossible to accumulate $1 million in 17 years based on a zero starting balance in 1987 and15% contributions (10% plus 5%) and the returns we have seen. The S&P 500 is "only" up about 600% in that time.

I have heard a couple people say they are over $300,000 but that is the highest mentioned.

[tsptalk]

Someone just sent me an IM saying that after 18 years, they are just over 400K. It pays to start early. Way to go!

U.S. Department of the Interior, U.S. Geological Survey

http://hr.er.usgs.gov/calculators/tsp/

I ran the numbers using the above calculator, starting with a $30,000 annual salary and a 2.5% annual increase for 17 years. The result was a balance of $230K (appx) with a average 10% annual return (appx C fund historically).

It's the only TSP caluculator I have found where you can plug in projected salary growth.

[pyriel]

tsptalk wrote:
Someone just sent me an IM saying that after 18 years, they are just over 400K. It pays to start early. Way to go!It would be nice to know if that is all in the market or if they reallocate them the way we are doing it here.

[tsptalk]

pyriel wrote:
It would be nice to know if that is all in the market or if they reallocate them the way we are doing it here.
From the anonymous $400K account holder...

"I started in the G fund for a few years. Then I was in the C fund from about 1990 until April 2003. I was in the S from April 2003 until late January of 2004. Then I started to reallocate anywhere from once every 2 months to as much as several times a month (with some limited success). If I had been smart enough to get out at some point during the 2000-2003 period, my account balance would have been significantly higher. I won't make that mistake again."

[Dakota]

tsptalk wrote:
pyriel wrote:
It would be nice to know if that is all in the market or if they reallocate them the way we are doing it here.
From the anonymous $400K account holder...

"I started in the G fund for a few years. Then I was in the C fund from about 1990 until April 2003. I was in the S from April 2003 until late January of 2004. Then I started to reallocate anywhere from once every 2 months to as much as several times a month (with some limited success). If I had been smart enough to get out at some point during the 2000-2003 period, my account balance would have been significantly higher. I won't make that mistake again."Impossible

[Dave M]

Chappy, I'm glad to hear you're doing that -- adjusting your income before entering the calculator. I do the same and it was never clear to me thatit was correct to do so. Your 2.5% is probably very near the truth. Don't forget to include step increases!

Here is whatI do. First I estimate my ending salary,incorporating COLA's and step increases. Then Itake my current salary -- base salary remember;I do not include premium pay --add the estimated ending salary anddivide by 2 to get an average. This average salary willbe on deposit for the entire time, so I use it for the calculator.

Then to get a baseline minimum I assume 100G and use 5%. I adjust this number upward in increments to see how the final answer varies with the estimated percentage return. If you think that 10% is a good average return for the market, then you must reduce this by the proportion you believe will not be invested in the market, on average, over the life of the account. For example I am trying to remain 60% in the market, 40% in the G fund over time. So I would take 40% of 5=2%, and 60% of 10=6%, and add these to get an 8% effective return.See what I'm saying?

I also think I have to add in my catch-up contributions. They are fixed dollar amount andsocannot easily be added to my contribution percentage, and besides what if I am already at 15%? That is the largest number the calculator will accept.Since I cannot adjust the percentage I must adjust the salary instead. To do this I work backwards and ask, what would I have to add to my salary such that 15% of it equals my catch-up contribution? If I'm kicking in $4000, then the answer is $26,666. This should be added to my estimated average salary.

Whew!

Dave

[tsptalk]

Dakota wrote:
tsptalk wrote:
pyriel wrote:
It would be nice to know if that is all in the market or if they reallocate them the way we are doing it here.
From the anonymous $400K account holder...

"I started in the G fund for a few years. Then I was in the C fund from about 1990 until April 2003. I was in the S from April 2003 until late January of 2004. Then I started to reallocate anywhere from once every 2 months to as much as several times a month (with some limited success). If I had been smart enough to get out at some point during the 2000-2003 period, my account balance would have been significantly higher. I won't make that mistake again."
Impossible
Very possible!

[bklyngal]

I have been in TSP for almost 12 years and I have almost 300k in tsp. I have always contributed at least 10%, had my money in c for the majority of the time. If i had used a site like this in 2002 and 2003 I think I might have about 50k more... I do have the advantage of a high gov't salary so the $$ contributed by me is significant. Thi year I am contributing the 14k max. I think the 1million mark is w/i my reach in the next 8 years.

[tsptalk]

Yes. Starting early and getting abalance churning during those big bull years was the key. It's our get rich slow plan that works.

[Ed]

Sorry about the late reply.

My original projection included my wife's TSP account. I'm currently a GS-14 and my wife is apostal employee equivalent to a GS-11. Currently, we have achieved about 60% of the $1M original goal. With 33 months left to retire and continuing maximizing our contributions, we need over a 14% return during this period to achieve $1M.

Highly unlikely. Nevertheless, we're happy to have accummulated the amount that we did so far.

Ed

[Birchtree]

Ed,

If you want to hit the $1M, both you and your wife will need to step up and not be shy. Put your cash 100% on the C fund with subsequent contributions going toward dollar cost averaging. Have your wife put her cash 100% on the I fund and dollar cost average the contributions. We have been treading water for two years which is great for dollar cost averaging- but now we are approaching the second leg of this bull market and it may run 3000 points or more. Take the ride. Remain cognizant that we may see a four year cycle low sometime late in 2006 - or may be not. You have to remain aware and let that power account go to work. Read some of my account talk to get a better idea of who this fool really is - my money is where my mouth happens to be. Good luck.

Dennis

[Rolo]

How come C is always mentioned and never S for long term buy-and-hold? Ya gotta have both!

One acct domestic and one international is a good idea.

[Birchtree]

Rolo,

Small-caps are completing a seven year run - there is a wall out there someplace.

If you look at a graph of the Russell 1000 Growth index, you will notice the price-to- earnings ratio went from around 65 in 2000 to around 22 in 2005. They are cheap in comparison to small caps at this point in the cycle. The S&P 500 is now the value play and as a contrarian this is where I sit. The companies I look at in the large cap sector have solid free cash flow, plenty of cash on the balance sheet and are reducing debt. These are higher quality earnings that have not been seen in years.

Dennis

[Rolo]

Ahhhhh! I see.

Yea...some of us thought that shift happened last year...but it wasn't it. Looking at the charts, though, it does seem you are correct.

[teknobucks]

ED!
MY GAWD>>>.......
NINE MONTHS LATER U ANSWER A THREAD!!!:i:D:D:D


then u apologize about being late........LMAO!!!!!!!!!!!
sometimes i forget this board is full of govt. employees....thanks 4 the wake up call ED!!
friggen hilarious!!
tekno.
ps:dakota iknow a few folks who have around 400-500k in tsp...fers types that started in the mid 80's....maxed out their contribution and played the C heavily.

[Spaf]

teknobucks wrote:
ps:dakota iknow a few folks who have around 400-500k in tsp...fers types that started in the mid 80's....maxed out their contribution and played the C heavily.

A few folks!.................Huh!

Does anyone know what the average member account is for investors starting in the mid 80's when TSP was started?

Where is Dave M, our math expert?

What does the account curve look like for the investors of the 80's?

I remember. There was no guidance on investments. No one to talk to. Really you were left on your own.

If I would of maxed out my contributions and played the C heavily. I would have been up [bleep] creek! However, to those more fortunate, I'm glad it worked out!

TSP is a retirement savings plan. You need more! A crisis can hit a family in a moments notice. The older you get, the more unfortunate things happen, i.e., your kid losses a job, illnesses, medical cost, identity theft, etc. etc. If all of your money is in TSP, what are you gonna do?

My way of life: Take avantage of the government matching contributions. learn how to take the best positions with TSP allocations i.e., TSPTalk. Save money in a Tax paid system, and keep an emergency nest of at least 10K in a easly accessed fund such as as a money market account

As time passes inflation will up the numbers.

However, if you have a goose that lays golden eggs, forget what I've said and go out and have a blast!

Rgds :) Spaf

[Spaf]

Addendum:

A lady visited our office and we got to talking about TSP and investments.

Herself and her husband are both government employees. I would guess that both are around the GS-12 to GS-13 range. They are generally with the G-fund, and other funds as advised. Every quarter they meet with their financial advisor to review their allocations. The financial advisor charges them $3xx.xx, per visitto do this.

Rgds :* Spaf

[Ed]

Dennis,

Trying a paid advisory service this year (first time) and up 4.95% YTD. Out of curiosity, I'm tracking the return against TSP Talk and my old strategy (55% (C), 15% (S), and 30% (I)):











Paid Advice
Non-Paid
My Old Strategy






2004 Close




30-Sep-05










4.95%
0.79%
5.43%

Considering that we've been on average 50% in G Fund the return isn't too bad and the risk was low too when compared to 100% in C Fund. So far sastifified, but, we'll see ifpaid advisory serviceworksoutin the long haul.

Ed

[bkrownd]

Spaf wrote:
Every quarter they meet with their financial advisor to review their allocations. The financial advisor charges them $3xx.xx, per visitto do this.

I am in the WRONG line of work! :shock::shock:

bkr

[Dave M]

I was lazy -- 5% for a few years, then 10%, then moved a little into stocks, etc. Only recently have I maxed it out. I never really paid much attention to it until all of a sudden I had some real dough in there. Afteralmost 20 years, 1987 to 2005, I am pushing 200K. It could easily be half again that amount, and I was inthe modest GS-9 neighborhoodfor much of that time.

Dave