There is a television game show called Who Wants to Be a Millionaire?. You compete against other contestants and answer questions. On the reality survivor show, Alone, Roland Welker won 1 million dollars by surviving 100 days in the wilderness. Take charge of your own destiny and forget about getting rich from game and reality TV shows.
There are approximately six million Thrift Saving Plan (TSP) participants who are federal employees, active military and federal retirees. I am sure that every single one of them would love to be a TSP millionaire. The reality of it is that there are approximately 100,000 TSP millionaires and it is an elite club that welcomes new members. Recently, many of my friends, acquaintances and clients have informed me that they have become a TSP millionaire.
The recipe to be a TSP millionaire is quite simple. There are three major ingredients, the first two of which are to maximize your contributions and invest as aggressively as you can tolerate. The last major ingredient is that you need to be patient. Time is on your side if you are planning to have a 20-to-30-year federal career.
Before you reach retirement, you can achieve this important milestone. Paying yourself first is a very critical element. If you contribute 5 percent to the TSP, the federal government matches that 5 percent. I had a client who was only contributing 4 percent to his TSP, and he had no explanation as to why that was happening. He was losing the 1 percent matching on his $100,000 salary. For him, that loss amounted to $1,000 each year.
I reached the TSP millionaire mark in May 2014, the $2 million mark in February 2020 and I reached the $3 million mark in December 2021. During the financial crisis of 2008-2009 and the February 2020 COVID-19 pandemic, my TSP dropped in value from 30-40%. During these shaky times, I continued to contribute to the TSP.
TSP participants usually break down into two groups. One group is the ones who ride the TSP rollercoaster and the second group is the ones who ride the merry-go-round. Those who ride the rollercoaster are experiencing the highs and lows of the stock market. They know that the market has hills and valleys, twists and turns and it is going to be a shaky ride. Those who ride it are investing aggressively in the TSP.
Historically, it was a scary ride during the .com years, the financial crisis of 2008-2009 and now during the COVID-19 pandemic. I have ignored each one of these financial crises. To get myself through these tough periods, it is the same as when I ride the rollercoaster. It is okay to close your eyes when you experience fear. During the uncertain times in the financial markets, do not watch the financial news. Instead, focus on your career and other interests.
And those who are in the G Fund are riding the merry go round. There is no stress on this ride. There is nothing wrong with the G fund except that the present rate of return will not keep up with inflation. If you are withdrawing 4 percent per year and the G Fund is earning 3 percent per year, your account will be diminishing over time.
During my 36-year federal career, I achieved many wonderful career accomplishments. The greatest one is that I became a TSP millionaire. The day that I retired and walked out the door for the last time, that wonderful achievement will stay with me forever.
Abraham Grungold is a retired Federal Employee with over 36 years of federal service. He is the owner of AG Financial Services, a business is to help employees with their TSP and FERS retirement decisions. He has written over 30 articles about the TSP and FERS.
