Sensitivity, Retirement and New Year’s Resolutions

Everyone lives with an accumulation of choices we have made over time. Some readers will retire early; others will never be able to retire.

Are you making resolutions you intend to follow in 2006? If you do, you are not alone. Research shows that about 45% of Americans make resolutions they intend to follow in the new year. And the results of these good intentions?

75% last past one week. 71% last past two weeks. 64% last past the first month. 46% last past six months.

For some readers, a resolution may be to contribute the maximum amount to their Thrift Savings Plan. That’s a good idea. And, if a new year’s resolution works for you, then go for it. But be realistic about your financial future and try to make it last longer than the resolution to start working out three times a week and buying a new gym membership that you never use after the first couple of weeks.

In a recent article, I wrote that federal employees have an opportunity to contribute more money to their Thrift Savings Plan but “[f]or those readers who don’t have this much money, or their expenses are already equal to or exceeding their income, or can’t control the urge to open their wallets when entering the mall, the TSP catch-up provisions don’t apply. You can keep on working and keep on contributing to your retirement system until late in life or until you die on the job.”

Some readers thought this was “insensitive” to the financial plight of some readers.

Perhaps pointing out an obvious truth is politically incorrect and should have been accompanied by various adjectives so it read something like: “Even though it is not your fault you don’t have any more money to contribute to the TSP program, if you don’t contribute to the TSP and you are a federal employee under the FERS system, you may find yourself in the unfortunate position of having to work longer than your more fortunate colleagues.”

That may sound better and may even hide an unfortunate reality, i.e., if you are a federal employee in the FERS system and don’t contribute to the TSP, for good reasons or bad ones, you may have to work until you die.

But here is some news that will make some readers feel better: You don’t have to be a millionaire to retire and be happy.

In fact, there are not too many Americans who do become millionaires and they are still able to retire–and apparently do quite well. Only 4 percent of Americans are millionaires. That means there are going to be 290 million or so who are not millionaires and never will be.

Author Paul B. Farrell says that happiness does not require being a millionaire. In fact, the happiest Americans are not necessarily those with the most money. Most Americans are happy with their financial situation. In a survey done by the AARP, 93% of those surveyed were happy with their financial situation.

The amount of money you will need to retire obviously depends on how much you are going to spend. Most people will not dramatically change their spending habits. If you and your spouse are both senior executives and have a lifestyle that includes spending most of what you earn, chances are you will want to keep spending about the same amount after you retire.

If you are living alone as a GS-5 and getting by on that salary, chances are you will be able to continue to live on that amount of money after you retire.

Most people need to accept the reality that they have created and live within that financial reality. If you dropped out of college, married your high school sweetheart, and then divorced after 20 years of marital hell, a good portion of your federal annuity will probably be going to the loser you never want to see again. That may mean you have to  work much longer than your more fortunate colleagues.

Perhaps you started out scrimping and saving after graduating from college and going directly to work for Uncle Sam right out of college, are happily married to the same spouse and you are now a GS-15 with a million dollars in your TSP. You can probably retire early and enjoy going on exotic trips and will enjoy visiting your grandchildren and showering them with gifts. Congratulations.

Most of us make resolutions for the new year. Some people actually follow through on them; most do not. As a federal employee, you are very fortunate as most Americans will never have a pay and benefits program that is equal to the one for federal employees.

All of us live with an accumulation of choices we have made over time. Look around any office and you can probably pick out the people that have generally made good choices. Perhaps they were lucky; perhaps they were smart; perhaps they have the right horoscope.

The reality is that  some will retire early, be financially secure and happy.

Some will have to work until they die because they don’t have enough money to live on without continuing to work.

As some readers have said, telling people they can never retire may be insensitve.  But, pointing it out may give some readers an incentive to contribute more toward their TSP or other retirement funds before they discover the reality of their situation.

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. Follow Ralph on Twitter: @RalphSmith47