Readers' Comments
Total Comments: 23
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A Model Retirement System? How Did This Happen?
Total Comments: 23
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March 21, 2010
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Ralph Smith
DoD
Wed Dec 22, 2004 8:42 AM
Post Reply
Ralph Smith is a breath of fresh air. Day after day his articles reflect a frank and dependable point of view. In all the years I've been reading Ralph's areticles I've developed a trust in his work and insight. Thanks, Ralph, and Merry Christmas!
Retirement plans
VA
Wed Dec 22, 2004 8:51 AM
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This short description of CSRA vs FERS is one of the clearest explanations of an important issue that Americans face in the next few years. The way some politicans explain this, e.g., giving people a choice, is simplistic and tragically demogogic. People's education and income will play an important role in some tough decisions and some people will be severely hurt by a bad choice.
Re: Retirement plans
DoD
Thu Jan 13, 2005 9:26 AM
* Size. Spreading cost over a million participants keeps overhead rates very low.
* Cost absorbed by agencies. Some administrative costs are absorbed by the agency payroll office. There's no charge to me or to the TSP system for the cost that Defense Finance and Accounting Service incurs when I change my withholding rate in TSP, for example.
How can FERS be a Model Retirement System
DLA
Wed Dec 22, 2004 9:08 AM
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The FERS/TSP system has no component that allows you to protect yourself from a falling dollar or inflation. Please tell me. Where is the Foreign Bond and Precious Metal components. I think that these are absolutely required when government policy is geared towards lowering the value of your currency or inept with it's trade policies.
Re: How can FERS be a Model Retirement System
SSA
Wed Dec 22, 2004 3:14 PM
Re: How can FERS be a Model Retirement System
DLA
Mon Dec 27, 2004 7:26 AM
Kudos
Dept of Education
Wed Dec 22, 2004 9:16 AM
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Congratulations on a wonderful, "fair and balanced" article that clearly articulates the advantages and disadvantages of the various retirement plan concepts.l
Right On & CSRS Employees can beneifts from both.
DOT
Wed Dec 22, 2004 9:43 AM
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I'll be retiring after 35 1/2 years service this month and I elected to invest in the TSP when it was first started. I'm CSRS but also have a subtantial THRIFT savings to boot. Those approaching retirement need to know what options they have with the THRIFT plan - and there are many to choose from.
FERS Works for Me
EPA
Wed Dec 22, 2004 11:57 AM
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I was one of those CSRS employees who elected to switch to FERS when it first became available. Most of my friends thought I was nuts. I did it because I didn't think I would 'retire' from the government and wanted a portable account. I contributed the maximum amount from the beginning and watched my TSP investments very carefully. If all goes well in the market, (and I'm maintaining a fairly conservative course right now) I should be just fine when I retire, if not a little better off, than if I had stayed in CSRS. It is a bit scary, but FERS does require that you participate actively in your investments AND you do have to rely on the long term health of Social Security. I wish my spouse had the same retirement investment options available to him in the private sector. The TSP has had its ups and downs - the low point being the controversy over the failed accounting system and the $30 million costs associated with fixing it. But, right now, it seems to being doing well and the system is very user friendly. If the TSP can continue to keep the administrative fees low, keep the ability to fund transfer quickly at no cost and offer even more investment choices (socially responsible funds, precious metals, etc?), then I think it does seem like a model for the private sector. The key will be to keeping the costs down - which may be difficult if you are dealing with big for-profit financial institutions.
A Few More Points
US Army
Wed Dec 22, 2004 12:48 PM
Post Reply
FERS is a model retirement plan. It is also a very good one; however, the article should have addressed a few more points. First, FERS has three components: Social Security, a modest defined benefit component, & a defined contribution component (TSP). Social Security and the defined benefit component are the safety net for TSP. TSP alone is not the model retirement system; however, TSP is the critical component of the system. Those who fail to invest in TSP will probably regret the decision in retirement. Second, TSP itself is an excellent model for a defined contribution plan. It includes everyone with a 1% agency contribution. It provides another 4% of matching to encourage wider participation. Failing to invest enough to get that 4% agency match is a terrible mistake—it’s free money! TSP offers a small number of diversified investments that are sufficient for investors with varying time horizons and risk tolerances. (I am biased on this since I believe in index fund investing.) One can quibble about the lack of this investment or that investment (I would love to have a REIT index fund and a true small cap stock fund, but that’s in my IRA.) Most importantly, TSP offers low annual costs and low costs add up to a lot of money over several decades of investing. TSP is a model system in large part because it is administered by an independent board with fiduciary responsibility to the employees who invest in TSP.