TSP Millionaires

[Boghie]

Frixxxx,

Looking good. And, real good if you get TriCare benefits!!! I think it will be medical costs that kick my butt a bit.

But, I think my numbers will be as follows:

FERS = ~25,000 yr
TSP (till 100)= 70,000 yr
Retirement Age will be 65
​

Social Security will probably bring in about the same as FERS, but both will be cut if we keep running Trillion Dollar Deficits. Regardless, I am too dumb to figure out my FERS and Social Security benefits anyway so I really just exclude them. They are for the Winnebago and Sail Boat Driver Funds.:nuts:

I'll probably clear about $60K - $65K via TSP in reality because I will hold more fixed assets from about 60 onwards. Don't want to be caught at retirement in a 2008 scenario...

 

[burrocrat]

that's nice and i respect y'alls hard work and success, but one million don't mean crap when a bag of rice and some fish costs one point five. there is a macro game going on here that we all will lose, some worse than others.

 

[Boghie]

that's nice and i respect y'alls hard work and success, but one million don't mean crap when a bag of rice and some fish costs one point five. there is a macro game going on here that we all will lose, some worse than others.

Burro,

Everything I do is inflation adjusted. The numbers include the era of Jimmy Carter I when inflation was like 14% - or something dumb like that. During that time fixed income was something like 20%, wages were increasing, and equities were kinda holding their own. Inflation hurts most when you stick your savings in the mattress. Inflation can be beaten by the FED and our investments will deal with them. The FED has been dealing with deflation - that is far more dangerous.

Stay invested for the most part and contribute everything you can while young(ish).

 

[law87]

Frixxxx,

We will be seeing 'compounding gains' in the count of millionaires in TSP. It only makes sense. With the balances you and I are talking about in our middle class accounts (and yowser, these guys got to the mil mark in 25 years) a one percent move is a very nice move. Kinda like a week at the old rock quarry, eh. With compounding on that scale a mil is very approachable... Just gotta be in to win. A little Alpha helps a bit. Seeing a looming downturn helps a lot. Don't need it though. Just gotta be in to win...

Reading the link you posted makes me wish I was smarter as a youngster. I didn't really start investing in TSP till I was screwed by President Clinton's tax increase. I had those two bills of take home income spent and he left me with a $50 hole instead. Kinda pissed me off, but all for the better. Learned how to game 'Grabby Sam the Goober Molester'...

For those (FWM:cheesy who think it can't be done, here is how it is done:

Age: 24
Salary: $24,000/year
Inflation: 3%
Invest in C Fund: 11% Return (see linked article, this, or any study of S&P 500 returns - Amoeba, are you listening)
Contribution: 10%, increasing with inflation ($2,400)
Match: 5%, increasing with inflation ($1,200)
Total Contribution: $3,600 at age 24, increasing with inflation
​

Results:

25 years in (Age 49 and the time it took the folks in the article to accumulate a mil): $581,547
Age 60: $2,004,428
Age 65: $3,095,597​

At retirement, this chap will be able to pull about $80K (in today's mullah) a year till s/he croaks at 90 driving his or her boat into a bridge pylon or something. If our Winnebago Hero re-balances to safety at age 60 and earns 5% from then it will be a tad less. This DOES not factor in the FERS pension or the Social Security benefit.

Does saving 10% sound that hard. Maybe you want the Gubmint to keep investing your assets in its spending binge and earn the G Funds 5%. Then the numbers are as follows:

Age: 24
Salary: $24,000/year
Inflation: 3%
Invest in G Fund: 5% Return (see linked article, this, or any study of S&P 500 returns - Amoeba, are you listening)
Contribution: 10%, increasing with inflation ($2,400)
Match: 5%, increasing with inflation ($1,200)
Total Contribution: $3,600 at age 24, increasing with inflation
​

Results:

25 years in (Age 49 and the time it took the folks in the article to accumulate a mil): $251,834
Age 60: $557,312
Age 65: $725,776​

Annual Income: $11K - Yuk and double yuk...

See what your Social Security tax (12.4% of Gross Income) (ahem, I mean investment) and your FERS pension (15% of Gross Income) are doing for you. Me thinks they is doing it TO us.

I hate how Federal employee get matching but Military doesnt! they make way more than us!

 

[Boghie]

Hey FWM,

If my GS04 Step 1 Forever guy never received a Social Security 'benefit' his contributions would have been free for the most part. Backing off the 15% contribution a bit to 12.4% would match the 'contribution' our long serving GS04 makes to his Social Security. In that case, here are his numbers:

Age: 24
Salary: $24,000/year
Inflation: 3%
Invest in C Fund: 11% Return (see linked article, this, or any study of S&P 500 returns - Amoeba, are you listening)
Contribution: The 12.4% currently buried in Social Security invested in the C Fund.
Total Contribution: $2,976 at age 24, increasing with inflation, and feels like a grand Goose Egg $0 to my GS04​

Results:

25 years in (Age 49 and the time it took the folks in the article to accumulate a mil): $480,745
Age 60: $1,656,993
Age 65: $2,559,027​

Annual Withdrawal (to age 90): $68,894 - While our GS04 will be used to living off of $24,000, yuk, yuk...

Instead, our persevering GS04 will attain a Social Security benefit of something like $10,000. The FERS contribution and benefit is similar. Too bad everyone thought Bush was dumb when he wanted to allow us to allocate 25% of our Social Security benefits to something other than day to day gubmint spending. How dumb was that guy. I mean, he wanted to give me that option right at the top of the market. Bloody idiot. I would have lost like $2k. And, then I would have gone all Amoeba and bailed to the G Fund and locked in my $2K of losses. I would be broke. Absolutely broke. I could never recover. Except, I already have...

That brings me to all these dummies wanting me to increase my contribution to the FERS pension. I don't want to pay into that pig. I would rather kill it than pay a dime in it. For me, just kill it and leave me alone. Maybe, to be fair, just increase my TSP match by a couple of points. If that happens I will make NO claim to the FERS pension benefits, but do not grab anything from my paycheck for this Dumb Bunny Investment. Me thinks that is fair...

 

[RealMoneyIssues]

I hate how Federal employee get matching but Military doesnt! they make way more than us!

um, fed workers don't get a lifetime retirement at 20 years either...

 

[Boghie]

I hate how Federal employee get matching but Military doesnt! they make way more than us!

Conversely Law87,

How many 38 year old retired civilian Federal employees do you see out there. A person serving in our military can attain a decent pension, good priced medical care, some decent skills, and more by the age of 40. Then he/she is prime for civilian employment - private or public. See Frixxxx's nice Air Force retirement benefit.

I do not have any of that. I cannot 'retire' till a minimum age. I think it is 57 for me - and that guarantees a fight for the almost empty Alpo can. And our medical benefits are definitely not in the league of a retired military medical benefit.

But, personally, if I were a young Marine (or whatever) I would have preferred a 401(k) type plan with a high match and good medical care if I get injured on the job. Maybe the Feds automatically putting 3% of my salary into a 401(k), matching to 6% or 7% of my contributions, and providing medical benefits if needed (as a result of a service related injury). No pension at all. Cheaper for the Feds, assets placed outside the grasping hands of future politicians, and those assets are transferable when I leave the Service.

Don't hate on me man

 

[Boghie]

Also,

Civilian employees do not get a housing, food, or clothing allowances. Nobody cares how many children we have. We pay for our energy use, our water, our sewer, etc.. We pay a decent chunk (1/3) of our medical insurance. We pay for our life insurance. And, politicians have no problem not giving us COLA raises.

It all ain't peaches and cream on this meadow...

I ain't crying, but...

 

[alevin]

(un)funny thing is it took me til about age 43 to accumulate that first 100K (10 years of being a low-mod income fulltime fed, starting at age 32), at which point I promptly lost 25% in the 2000-2003 meltdown, took me til 06 to get back to even. Base retirement calcs for beginning fed all depend on where you start agewise, and depend on when the wakeup happens. Younguns on this site are way ahead already edumacationally of where I was as first 1/3-1/2 career, and will end up way ahead as well.

Big names are predicting 2 more market declines of 50% or better within the next 10 years. No predictions on when. Do I need to sidestep them both-hel yes. If I don't, will surely be eating alpo if eating at all. Not counting on SS at all-due to go in the red about the time I get my 30 in. Yuk. If its there, will be an unlooked for bonus.

 

[Boghie]

(un)funny thing is it took me til about age 43 to accumulate that first 100K (10 years of being a low-mod income fulltime fed, starting at age 32), at which point I promptly lost 25% in the 2000-2003 meltdown, took me til 06 to get back to even. Base retirement calcs for beginning fed all depend on where you start agewise, and depend on when the wakeup happens. Younguns on this site are way ahead already edumacationally of where I was as first 1/3-1/2 career, and will end up way ahead as well.

Big names are predicting 2 more market declines of 50% or better within the next 10 years. No predictions on when. Do I need to sidestep them both-hel yes. If I don't, will surely be eating alpo if eating at all. Not counting on SS at all-due to go in the red about the time I get my 30 in. Yuk. If its there, will be an unlooked for bonus.

I only wish sites like this were up early in my career.

But, Alevin, you have to have more confidence in the kleptocratic, money grubbing, grasping, grinding grubby executives and Wall Street bankers. They spend every second of every day trying to invent things for you to buy from them - smart phones, internet businesses, 3D printing, entertainment, hybrid cars, longer life batteries, fraking, and a bunch of other stuff. They grind for profit every second of every day. And, they are pretty good at it. Bet on them and we can be one of them (somewhat).

All we have to do is send them some baubles. They then steal oil at $90 a barrel, sell butt-hugging jeans to fat Russians, construction cranes to the Chinese, iPhones to the Japanese and on and on. All we have to do is sit in our gubmint offices collecting paychecks and DCAing into the equity funds:toung:.

Once you hit 60 or so smooth things out a bit with G/F. That should smooth out any big correction. Maybe a 30% or 40% allocation in C/S/I. I wouldn't worry too much about big declines. They are relatively slow - kinda - and the recovery is quick. Just step out of the way into a conservative allocation. Maybe set a loss mark of 10% or so then run till the market recovers it.

 

[burrocrat]

ha! sell butt hugging jeans to fat russians? that was a good one, i'm still laughing.

i wasn't trying to say you were wrong about inflation boghie, just that things don't seem to be right in general. that strategy works great as long as the game doesn't change. this isn't economic kansas anymore, the old rules got broken and our backs are up against the debt wall. there is no defense for cataclysmic events or collective stupidity.

i hope i'm wrong, but i wouldn't be surprised if we look back in twenty years and laugh at our quaint little retirement dreams. how silly, like that lead balloon was going to float for ever. then it's all knees and elbows and scratching for a morsel, desperate people do desperate things. may we live in interesting times.

 

[PessOptimist]

Interesting reading this.

A few mostly random thoughts.

Frixxxx, you probably have shared this before but what is your current status. Something like what we used to call an air tech, GS or WG during the week and guard for drills and when activated? Curious about that AF retirement and FERS at age 57.

A reminder to all, Tri Care is not free. It is cheap but not free. Some may consider it a Cadillac plan but you have to jump through a few hoops to get that Caddy’s door open. Biggest hoop in this neck of the woods is getting the initial appointment with the primary care manager. Myself and many others I know have FEHB plans since family members can’t deal with the Tri Care herd thing.

No matching funds for the military is a bummer. The trade offs on benefits mentioned are all valid IMHO. I served 20+, get my annuity and a cheap medical plan. The tax free BAQ and BAS helped the family survive over those years. Maybe 1/3 of the yearly income. I retired in 96 so had no TSP offered.

Retiring at 57 ain’t too shabby. Wish I could have. Changing careers at 45 and getting an annuity from the former job was good. Making more in 6 months at the new job than I ever did in one year at the old one was real good. That includes the tax free BAQ/BAS.

No one is crying, just pointing out differences in their career paths. We all do what we do.

The military doesn’t care how many children you have, one gets you the allowance. Two gets you the same allowance. I never lived in military family housing so always paid my own utility bills. Don’t stereotype please. It’s not as cushy as you may think, especially if you never served.

I started fed service at age 45 and have been contributing much more than 10% to my TSP account. I am hoping to have close to ½ mil when I retire at 65. WooHoo, 20 years and 62+ years old should give me 22% for FERS annuity.

I was 53 when my TSP balance hit 100k. That max contribution thing plus modest earnings does work magic.

The flaw I see in my nest is that all the eggs come from the same basket, funding for which can and has been borrowed from at any time. Even lock boxes have keys. Theoretically the 60 or so % of my TSP that is in equities is mine but congress critters could probably figure out a way to exchange that for an IOU. Burro may be right.

FWM your math is a bit fuzzy too. I calculate 2.5 mil in Boghie’s TSP to draw 70k for 35 years even if it never earns another cent. I hope he does live to be 100. By that time “Obamacare” aka “The Affordable Medical Care for all Americans Act” aka “Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief act of 2010” aka public law 111-192 or whatever they change the name to next will either turn him in to a protein bar or a traveling exhibit for how well things are working. Sorry Bohgie.

Myself, if I get lucky enough to have 500k in TSP when I retire, will divide that number by 20 and get 25K/year. After that see the acts/laws referenced above.

Peace and love everyone, peace and love.

PO

 

[Frixxxx]

I hate how Federal employee get matching but Military doesnt! they make way more than us!

I don't know how many times I have to repeat this, but a 20 yr retirement from the military is like having someone give you a MILLION dollar annuity. Figure it out and be happy you stayed in. TSP is just an investment engine that other people have to go out and get from anyone else. Also, I have a financial planner. I have mutual funds, Municipal Bonds, and a couple of CDs... leading to

Interesting reading this.

A few mostly random thoughts.

Frixxxx, you probably have shared this before but what is your current status. Something like what we used to call an air tech, GS or WG during the week and guard for drills and when activated? Curious about that AF retirement and FERS at age 57.......
Peace and love everyone, peace and love.

PO

I am an ND-04 on the STRL Pay Banding - Computer Scientist
I am a traditional Air Force Reservist. I will actually start receiving my checks at 60. I will take the other 401Ks I have to offset the 2,000/month until then.

BTW, the TSP isn't fixed until you put it into an annuity. Fear puts you into an annuity.

 

[Boghie]

Hmmm, sounds unrealistically fuzzy to me

Your FERS retirement of 25K means your hi 3 salary would be inverse of about 30-40% of your hi 3 which comes out to a hi 3 of near 75K/yr.
And you expect your TSP portion will come out to 70K/yr??? :cheesy:

From fixed income at near todays rates of 2%? Or lets say yesteryears rate of 4-5%...you would need to have 1,5 million in your TSP back then, or 3 million in your TSP account in tidays fixed income levels. And how much of your 75k/yr would you put away into your TSP every year to achieve this? The max (approx 15K/yr?) Even that along with 5% matching doesn't get you anywhere near there?

But its a nice fantasy. I'll let you dream it.

Me, I prefer practicality over fuzzy math fantasy.

If I can retire at 65 and have my FERS pension and Social Security combine to be near 60% of my hi 3 avg...then 400K and taking out 4-5% annually or fixed income somewhat lower in my TSP would give another 15-20% of my high 3...givnig me a comfortable retirement of 75-80% of my high 3. If we have another 20 year secular bull market from here...maybe my (and your) TSP portion will be higher. Would be nice, I'm hoping for it...but I'm not betting on it.

Pretty close...
Actually, very close...

Use this calculator: DinkyTown.net '401(k) Savings Calculator'

I currently put 10% of my salary into TSP every year. I have put 10% of my salary into TSP the vast majority of the time since 1994. Only dipped to 5% in late 2007, then had BT convince me to bump it up and more from the Fall of 2008 onward. At an average return of 8% I will be sitting right around $1.5M. My average return is somewhat higher than 8% for any reasonable time-frame, so I am not worried about meeting that goal.

Also, my withdraws drain the account by age 95 - but I don't think I will be pulling $70K from my TSP account anyway.

So, yeah, your numbers are basically spot on. You even got my annual salary pretty close. Don't think it will be my highest salary, but I am doing fine...

So, then, what is the problem with the math. Looks like you got it straight. And, if you are real nosy you can guess my current balance. Largely staying in the market, saving a decent chunk, and starting early enough works wonders.

 

[Boghie]

BTW, the TSP isn't fixed until you put it into an annuity. Fear puts you into an annuity.

Awesome Frixxxx, awesome...

 

[Boghie]

Given that TSP has been around for over 25 years and had only 75 millionaires out of over over 2 million federal employees who are in the FERS (2010 survey, maybe a few more now)...it seems most here are grossly overestimating how much they'll have in their TSP accounts...and vastly underestimating the likelihood that FERS pension and SS is going to make up the majority of their retirement.

Whats more...those who began their TSP contributions in the mid 80s were lucky enough to be in most of the cyclical bull market (1983-2000).
If the bulk of your TSP activity was from the late 90's onward, most of your TSP money is just from your own contributions...not compounding rates of return, unless you're part of the 5-10% that consistently outperforms the market.

It is very entertaining hearing everyone predict how many millions they plan to have in your TSP accounts. Kind of like everyone predicting how much they're going to make when they win the lottery.

The odds are certainly against us...just keeping it real

FWM,

I will have invested for 35 years by the time I retire. As the TSP millionaire stats include longer and longer saving lengths (every year increases the duration of saving by a year) the number of millionaires will grow. Soon it will grow exponentially and powerfully. I think Frixxxx posted that there are close to 600 in that status as of last year. 550 new millionaires in two years.

And, as you stated, you don't need a mil to live well in retirement with our other benefits.

I was just commenting on the fact that this millionaire club will include a lot of louts like me and Frixxxx. I have met Frixxxx - and I can find myself in the dark with a tennis racket and a baseball bat - but I can tell you that Warren Buffet still outclasses us. We ain't bad, but we are not Fund Manager Superstars.

Your numbers are basically spot on for me. So that does mean that a normal schlep can save a mil or better for retirement.

So, what's the problem.

 

[Sensei]

Using the calculator on the TSP.gov website, based on what I have in the account now, if I continue my current contribution of 13% of my salary this year for the next 28 years (when I'll be 66), and imagine average rate of return of 8%, I'll end up with a little more than $1.6 million. To me, that doesn't seem like it will be enough in 2050 dollars. Of course, I have a few steps higher on the salary schedule, and plan to up my contribution 1% for each of those steps. Still, I think my best retirement plan is to work as long as physically possible and set up my kids so that they'll be well enough off to support their parents.

 

[RealMoneyIssues]

I have met Frixxxx - and I can find myself in the dark with a tennis racket and a baseball bat - but I can tell you that Warren Buffet still outclasses us. We ain't bad, but we are not Fund Manager Superstars.

I've met him too, but I guess you got a better impression of him than I did...





j/k
:toung:

He's way smarter than me and seems to be doing everything right, so be careful, he WILL be a millionaire soon!

 

[PessOptimist]

I don't know how many times I have to repeat this, but a 20 yr retirement from the military is like having someone give you a MILLION dollar annuity. Figure it out and be happy you stayed in. TSP is just an investment engine that other people have to go out and get from anyone else. Also, I have a financial planner. I have mutual funds, Municipal Bonds, and a couple of CDs... leading to

I am an ND-04 on the STRL Pay Banding - Computer Scientist
I am a traditional Air Force Reservist. I will actually start receiving my checks at 60. I will take the other 401Ks I have to offset the 2,000/month until then.

BTW, the TSP isn't fixed until you put it into an annuity. Fear puts you into an annuity.

Thanks for sharing the current status. Yeah, you can't repeat that million dollar annuity thing enough. My time trying to do that was done years ago.

Sounds as if you have the financial future together pretty much. I understand about the TSP payout and am basing it on the "one time" thing you can change yearly.

Along that line, my agency recently put on a TSP pre seperation briefing. Those of us not fortunate enough to work at HQ were promised a video link. That didn't work and response was so "overwhelming" that they had another briefing. Only for HQ. They did a third limited presentation and a local HR person sent a PPT file and promised more presentations in the future. The PPT didn't tell me anything new but I bet told many personnel new things. Imagine, people actually wanting a TSP briefing. And management underestimating interest by say 200%. FWIW you had to get supervisor approval to attend.

The pay banding means nothing to me, have to research it. I'm not a rocket/computer/electronic scientist you know. Just a craftsman.

I bet you really miss the Beaumont area.

PO

 

[Boghie]

Using the calculator on the TSP.gov website, based on what I have in the account now, if I continue my current contribution of 13% of my salary this year for the next 28 years (when I'll be 66), and imagine average rate of return of 8%, I'll end up with a little more than $1.6 million. To me, that doesn't seem like it will be enough in 2050 dollars. Of course, I have a few steps higher on the salary schedule, and plan to up my contribution 1% for each of those steps. Still, I think my best retirement plan is to work as long as physically possible and set up my kids so that they'll be well enough off to support their parents.

I made a SWAG on your current salary and current holdings just to do the calculation in Quicken - which allows you to inflation adjust the withdraw. My best guess is that you are talking about a conservative $50K per year. That would be just COLA adjustments - not step or grade increases. And, a quick review of your returns kinda points to better than 8% - but that is a good number, eh... Only two years on the AutoTracker though...

My point in all this is: There will be lots of you millionaires. So many that Frixxxx will eventually get bored with this thread.

My other point is that the pension, Social Security, and TSP are very nice. Very nice. We don't all have to be Top Quintile Types

Your TSP account is Something Wonderful HAL, Something Wonderful