What impact, if any, has the decline in stock prices had on the retirement plans for federal employees?
How are readers changing their investment philosophy? Are readers putting most of their money into the relatively safe G fund or are they putting money into the stock funds on the assumption that prices will go back up in the future and turn out to be a good investment at relatively low prices?
50% of readers responding said they have not changed their retirement plans. That obviously means that about half have changed their retirement date while they try to recover some of their financial losses.
Not surprisingly, 50% of readers responding indicate they are putting more of their investment money into the G fund. 31% say they have not changed their investment philosophy.
As you will see from the comments below, there is a sense of panic among some, particular among those who had planned on retiring fairly soon. But many readers are optimistic that the value of their TSP funds will go back up over time.
Here is a summary of the survey results.
|My retirement date has not changed||828||50%||1653|
|Yes, by a couple of years||388||23%||1653|
|Yes, by two to five years||348||21%||1653|
|I’ll never be able to retire||89||5%||1653|
|no change in my investment strategy||508||31%||1653|
|I am putting more money into the F and G funds||828||50%||1653|
|I am investing more in the TSP stock funds||133||8%||1653|
|I am no longer investing in the TSP||37||2%||1653|
|I am now investing in the appropriate TSP lifecycle fund||70||4%||1653|
Most readers sending in comments preferred to comment on how they are investing their money in the TSP in view of the downturn in stocks.
A Contract Specialist with the Air Force in Oklahoma City, OK has delayed retirement: "Am under FERS, age 61 and had planned to retire at 62 but with TSP 1/3 of retirement, I have no choice but to wait out this recession."
A Budget Analyst with the US Southern Command in Miami did not say what he is doing but offered a general observation: "Between the stock market and the terribly negative impact conversion to NSPS has had, personnel at this command are of two minds: they’re either retiring immediately with the intent of seeking employment elsewhere that has a favorable management climate, or else they can’t see themselves ever being able to retire. Thanks for NSPS. It used to be "do more with less;" now it’s ‘do more with nothing, and like it or else.’ "
An Aeronautical Information Specialist with the FAA in Oklahoma City, OK does not plan to retire for some time but is not optimistic: "I have 15 years until my planned retirement date. I betting on dollar cost averaging and that the stock market will rebound like it has in the past. But the current crew in charge in Washington are doing their best to ensure it won’t rebound for a long, long time."
The Chief, Financial Services Branch for DoD in North Chicago, IL is delaying retirement: "I would like to work longer so that I can increase the amount in my TSP."
A Director from the Small Business Administration in Alabama has a guardian angel: "A voice in my head (guardian angel?) told me to get out of the C, S & I funds in spring of 2008. As a result I put ALL my TSP balance into the G-Fund AND left them there. As a result I lost nothing and should be able to retire next year as originally planned. Unless everything goes down the tubes, needless to say."
A Forester with the Forest Service in Wisconsin is hanging on to his federal job: "The agency is doing everything they can to make it easy to stay."
An Economist with the Bureau of Labor Statistics wrote: "I have transferred 100% of my funds from the stock fund to the G fund and future allocations into the lifecycle fund."
An Agriculture Management Specialist with the USDA in Traverse City, MI has changed how he invests in the TSP: "I moved most of the TSP funds that I had invested in stocks (C, S, & I) to the bond (G & F) funds over a year ago. I am using my current TSP contributions to buy shares in the C, S & I funds only."
An employee at the Department of State in Washington, DC makes an honest assessment of his approach: "I no longer look at my TSP statement."
A Medical Technician with the VA in Seattle wanted to retire but has delayed: "I am holding 60% G & F and investing still in stocks: I (fund) 20% and C & S (funds) 20%. Wanted to retire last year but postponed because of the down economy."
An analyst with the VA in Arizona is also disappointed and she thinks it could have been avoided: "I am 55 and don’t have much time left. I’ll never recoup what I have lost. My retired husband lost 40% of the value, including principle of his annuity from an accident. HOW DID WE GET HERE? PEOPLE NEED TO BE PROSECUTED FOR THIS FIASCO. IT COULD HAVE BEEN PREVENTABLE, WHICH IS THE SAD THING! The standard living of the average working American is going to be a lot lower because of all of this mess. Socialism will take us over now."
A Support Services Specialist with the IRS in Washington, DC is still waiting to decide what actions to take: "Thinking of transferring to the G fund if the I fund drops lower."
A Management Analyst with Defense in Atlanta is still working in order to add more stock to his TSP funds: "Now is the time to buy while the prices are down. Most of my TSP (70%) is in the G Fund but I now have what’s going into the funds each payday 50% diversified between the F, C, I and S Funds. Yes the value is down but the stock is still there and will one day go back up. Now is the time to buy! That is one reason I’m still working, so I can keep adding to my TSP."
A Research Team Lead with the Labor Department in Colesville, Maryland is also optimistic but has a long time before retirement: "Although I am postponing my retirement by a six or seven months because of the drop in value of my TSP, I also realize that I very likely won’t be tapping my TSP for another 10-15 years. By that time, the market will turnaround (it always has). I’m under the CSRS system, so I better off than my FERS colleagues, who rely much more on their TSP to fund their retirement. Boy, am I glad I didn’t switch to FERS in the late ’90s when the market was going crazy in the other direction!"
An Environmental Specialist with the Energy Department in Denver is implementing his investment plan and is optimistic but feeling the stress: "I moved 80% of my money into the G fund in the Fall of 2008, and started putting 100% in the TSP stock funds at the same time. It has become a nail-biter recently, but I’m sticking to it."
A Technician with the FAA in New Jersey is pessimistic for a different reason: "Been in the "G" for years due to my conservative nature. Co-workers advised to go "C" or others to make the big bucks. Now I figure I’ll be penalized/taxed by Obama and friends to "bail out" my risk taking co-workers."
An FAA manager from Jamaica, New York is taking an aggressive approach to investing: "I’m allocating present and future payments toward the C, S, I and 2020 L fund since prices are cheap and I have over 7 years before I plan to start withdrawing funds. I’ll re-balance in steps as prices start to recover."
A Service Writer with the Marine Corps in San Diego has changed his TSP allocation: "Like a lot of people I was riding the wave of high stock returns. I was heavily invested in the C, S, and I funds. then I was murdered. Now it’s all G, with some L funds."
A Network Specialist with the IRS in St. Louis, MO moved his money and glad of it: "Several years ago I moved my money into the G Fund from the S and I fund. Had I kept my money into S & I fund I would have loss over $80K in 2008 because of the market. Right now, I’ll take the small interest rate in the G fund and wait.
"An analyst with the USDA in Washington, DC sees a buying opportunity: "Lowest share prices ever. now is the time to buy."
A supervisor with the Bankruptcy Court in Cleveland is not yet worried about retirement and sees an opportunity to buy stocks: "My retirement is still 25-30 years away, so it is hard to say how much this downturn has affected me. I look at it like, "Hey these stock shares (C, S, and I) are really on sale, buy as many as you can now!"
There is optimism among many readers about their retirement future but those that are closer to retirement are more pessimistic. Some younger federal employees see a chance to increase the value of their TSP over time as they anticipate an economic recovery. As statistics from the TSP have demonstrated, the G fund is increasingly popular as readers wait to see how the current economic problems work out.
Our thanks to all readers who took the time to participate in this survey and a special thanks to those who sent in their written opinions.