A Growing Number of Wealthy Federal Employees

By on February 18, 2015 in Current Events with 290 Comments

How much money does one need in order to be “rich”? As noted in a Time Magazine article: “The rich don’t really think they’re rich. In a new survey, the vast majority of investors with $1 million in assets don’t consider themselves wealthy.”

That certainly depends on how the perspective of each individual but, at a minimum, a person who has accumulated at least $1 million in investable assets is either rich or financially very well off. About 1 in every 20 households in the United States has at least $1 million in investable assets.  Maryland has the largest number of millionaires per capita. These figures don’t include the value of real estate. Those federal employees who have reached this figure have reason to be proud of their accomplishment.

A few readers have commented on the FedSmith.com website to the effect that a federal employee cannot accumulate a million dollars (or more) in their Thrift Savings Plan account. Their theory, apparently, is that they do not make enough money to reach this amount to be used toward their future retirement. As one reader (rikker59) wrote when the number of millionaires was considerably smaller: “Without seeing the civil service grades of these 208 folks, their contribution history, other sources of income, etc. the story is just a “gee-wiz” statistic. Now, if they can show a GS-7 or even a GS-13 with dependents at the millionaire level using solely their federal income, then I’d be impressed.”

In fact, one reader who started investing in the TSP as a GS-11 explained how, after 28 years as a federal employee, this person reached the million dollar mark TSP mark late in 2014.

Fortunately for federal workers, there are a growing number of people who are proving these folks who say “it can’t be done” to be wrong.

Kim Weaver, Director, Office of External Affairs for the Federal Retirement Thrift Investment Board has provided FedSmith with the latest data on the TSP. The number of millionaires in the Thrift Savings Plan is now up to 4,167. Here is how this number has grown since 2012:

So, as the stock market has continued to go up, the number of TSP millionaires has gone from 208 to 4,167 in about three years. Perhaps Henry Ford was right when he said that “Whether you think you can or whether you think you can’t, you’re right.”

For those who would like to know the amount held by the wealthiest TSP investor as of February 6, 2015: $4,803,304.23.

To see how you compare with most TSP investors, this chart may be illuminating. These figures include both military and civilian participants in the TSP. This is important as the average TSP account from TSP investors who are in the uniformed serviced was $18,343 in December 2014. The average TSP balance for TSP investors who are in FERS was $115,046 for the same time period.

Account Balance Number of Participants
Under $50,000 2,798,455
$50,000 – $249,999 1,426,098
$250,000 – $499,999 375,472
$500,000 – $749,999 95,664
$750,000 – $999,999 21,485
$1,000,000 and over 4167

As might be expected, those with at least $1 million in the TSP have been investing longer than those with smaller numbers. For millionaires, it is 25.5 years. For everyone else, their average investment time has been 11.6 years.

And, for those readers who have proclaimed that those with at least $1 million in the TSP must have brought in their money from the private sector, it is true that some 18% of the TSP millionaires did rollover a substantial amount money into the TSP from another source.

Average Rollover Balance Percent with a Rollover
All Participants $40,946.59 4%
Millionaires $546,117.04 18%

According to the TSP, the average rollover balance includes both the initial amount invested as well as any gains or losses on the rollover.

Those who take advantage of the opportunity to invest in the TSP and who make the effort to contribute to receive the maximum in matching funds can reasonably aspire to achieving the million dollar level.

The stories from readers who have achieved this are often similar. They have usually diversified their investments between the TSP stock funds, sacrificed spending in other areas to have money to contribute as much as they can into the TSP funds over a period of years, and kept investing in both up and down market turns.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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