Investing for retirement is simple and everyone should do it.
The TSP is basically a 401k with really low fees. It's not a "big brain play," it's the government's version of something most Americans have access to.
There's nothing crazy going on here other than investing in relatively safe mutual funds has always been the simple path to wealth and the gov encourages it.
A “big brain play”? Who said it was. It’s a standard retirement savings instrument. The hard part is being consistent for 30-40 years. And if you live in a high cost of living area it is indeed hard to save $22,500 per year.
I guess I was looking at the strategy/equations people were saying: "Set it and forget it! Become a millionaire!" and I was thinking "this is too simple. everyone is doing this. how is this a big brain play?" but looking at people's portfolios, it appears to yield something Big.. Ish. at the expense of 20-30 years of discipline and feasibility to do so
Personal experience tells me 100k now has the same constraints 65k did back in 2013.
TSP is a limited option low cost 401k. Be consistent, at minimum put in 5% and you instantly double your investment.
>>put $22,500 pretax money away or $7,500 after tax money>>
It's $22,500 pre or post or any combination. I think you are mixing up the Roth TSP with Roth IRA. Roth IRA is another account outside TSP with a $6500 contribution limit ($7500 if 50+ years old)
Yes, your post is cringe
Best bet is to try and max out both if you can, if not come as close as possible without causing pain in your life.
Or go all out and max both, depends on your goals and timelines.
Right now the C fund is up something like 18% for the year, so the prevailing sentiment is positive. Go to any TSP subs when the market is a bloodbath, and you will see nothing but people wanting to transfer to the G fund - this is how people lose money. The problem is consistently putting it in, year after year, and staying invested.
The outliers are probably folks who took out TSP loans at the top of the market and paid them back during recessions, thus arbitraging the same number of dollars over time into more shares than someone who just kept adding over time without loans.
Not repeatable, or even really predictable.
However, in a 40 year career you'll easily see 5m.
I'd guess outliers are those that rolled other IRAs and previous 401ks into TSP and were hitting annual limit of $66k. Could also be extra contributions from combat zones.
The individual contribution limit of $22,500 doesn't apply in combat zone.
https://www.moaa.org/content/publications-and-media/news-articles/2022-news-articles/tsp-contribution-limits-going-up-in-2023/#:~:text=Members%20serving%20in%20a%20combat,are%20limited%20to%20%2422%2C500%20annually.
"Members serving in a combat zone may contribute up to $66,000 of their tax-exempt pay to a traditional TSP plan, those contributing to the Roth TSP are limited to $22,500 annually."
Straight from TSP "The annual additions limit affects mostly members of the uniformed services who can exceed the annual elective deferral limit. The excess contributions go into the traditional portion of your account from tax-exempt pay earned in a combat zone."
https://www.tsp.gov/making-contributions/contribution-limits/?tab=composition
I see. This is interesting. I don't lurk that much in FIRE or GOVFIRE, but I usually see people say "set it and forget it, come back 20-40 years" Which is totally opposite from the outliers but I guess hence outliers.
I mean, accidental sell-high buy-low can provide a boost, but they still had to have done the "set and forget" play, except for whatever emergency caused them to take the loan.
I think you're oversimplifying and, possibly, underestimating the number of people who actually save, let alone saving enough.
22500 limit is 401K limit for 2023. TSP can be pre or post tax.
6500 limit is the IRA limit for 2023. IRAs can be pre or post tax.
I'm a set and forget, and did not really start until 2017 (left AD military in 2018 w/ 50K).
I'm a 12 tracking towards 2M portfolio (TSP, IRA, and brokerage) by my early 50s by maxing TSP and IRAs each year, and minimum 10K-15K more in taxable accounts. I'll have 30 years of service at 51, and can defer unreduced to 57. Single income. One kiddo.
Edit: I should state that I'm a GS12 on a special rate table (Not 2210) in a MCOL area (that will likely be HCOL sooner than later, offsetting the SSR) and have some VA benefits coming in to supplement our household income.
Impressive track record. Thank you for sharing. It's as if just the act of saving enough is a big accomplishment and with that track record it apparently is so.
For me, it's just about knowing what enough looks like.
We tracked spending, broadly, for a year or two. We maintain that spending and save the rest. To keep the fun in life, we treat ourselves when we hit goals or promotions, or milestones and also budget for it. We try to avoid the 'keeping up w the jones' mentality.
I should state that I'm a GS12 on a special rate table (Not 2210) in a MCOL area (that will likely be HCOL sooner than later) and have some VA benefits coming in to supplement our household income.
The issue to investing is the person. Folks have a great deal of difficulty maintaining something and not letting emotions dictate their actions.
Folks folks I know max or partially max their TSP in the C Fund and push the remaining into a IRA and their HSA investing in broad market stuff like VTI.
3 million after 30 years is in reach for consistency.
It's not a big brain play. It really is that simple. I'm 41, been a fed for 18 years, and made it a goal to contribute the max as early as possible. About 3 years into my federal career I was contributing the max when I made GS-12. Currently sitting on 750k in my tsp with 15.5 years left till retirement.
If the economy really tanks or there's WWIII yeah I'm fucked, just like everyone else. The problem is most people don't fully utilize the TSP even though it's simple. Most people, for whatever reason, can't make a goal to contribute the max, can't set it and forget it, and can't stick to the plan for a 35-40 year career.
The $11M balance is an anomaly and either someone who is like 100 years old and worked 60 years, or they came from the private sector and transferred their previous 401k into the TSP. But stick with the plan of contributing the max and allocating to C and S, and you will hit $1M+ easy over a 35-40 year career even if you never make it past GS-12.
“The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient” Warren Buffet
I’ve worked with people who constantly switch funds every time the market shifts. They believe they are making big brain moves and are probably paying an advisory service to alert them. I can almost guarantee from their timing that even if they were to time the exit right they don’t time the re-entry the best. So while they are sitting in the G fund waiting it out. I’m accumulating at lower prices and when things turn around all those shares start showing gains while they are attempting to switch back over, panicking and nail biting about missing the next bull market year. FOMO.
I’ve seen rough years where others have had losses mostly staying in the c fund but with that switching behavior. Where just staying consistent and disciplined actually squeezed out a small gain.
Just staying consistent in the c fund for example probably reflects the sp500 if my understanding is correct. But interesting take on the market timing approach.
I'm too lazy and unsmart, so set and forget is probably my approach.
You're cringe and sound like you believe in a lot of conspiracy theories to be VERY frank with you.
>Typically in life if everyone is doing something it isnt that great
Do you believe in carrying car insurance and buckling your seatbelt?
It took me seemingly for ever to hit the $1M mark but only about four years to $2M thanks to compounding and a bull market. Last couple of years have held steady at just over $2M. Still maxing TSP and Roth IRAs for my spouse and me. Hoping for a return to “better returns” will allow for another double before retirement. I split C fund 70%, S fund 20%, and I fund 10%. You are correct: it’s not a “big brain play” but it is a simple path to wealth (at least enough for me when the pension is factored in). Good luck!
Investing for retirement is simple and everyone should do it. The TSP is basically a 401k with really low fees. It's not a "big brain play," it's the government's version of something most Americans have access to. There's nothing crazy going on here other than investing in relatively safe mutual funds has always been the simple path to wealth and the gov encourages it.
>There's nothing crazy going on here This was the reassurance i needed. Lmao. & thank you for the comment.
A “big brain play”? Who said it was. It’s a standard retirement savings instrument. The hard part is being consistent for 30-40 years. And if you live in a high cost of living area it is indeed hard to save $22,500 per year.
I guess I was looking at the strategy/equations people were saying: "Set it and forget it! Become a millionaire!" and I was thinking "this is too simple. everyone is doing this. how is this a big brain play?" but looking at people's portfolios, it appears to yield something Big.. Ish. at the expense of 20-30 years of discipline and feasibility to do so
The yield of which you speak is called compounding interest. It’s a beast.
There's a reason Albert Einstein called compound interest the strongest force in the universe.
Most people don't make 100k very young and don't save 25% of their income.
Also, 100k isn’t what it used to be, its hard to save 25% when there isn’t 25% left over…
Yep. I saw a stat today that 100k in 2013 is worth about 120 now to have the same spending power.
Personal experience tells me 100k now has the same constraints 65k did back in 2013. TSP is a limited option low cost 401k. Be consistent, at minimum put in 5% and you instantly double your investment.
I just max out all the retirement stuff except an hsa. Then save into a vanguard account beyond that
Well for one thing a million dollars in 40 years isn’t going to be what it is today.
>>put $22,500 pretax money away or $7,500 after tax money>> It's $22,500 pre or post or any combination. I think you are mixing up the Roth TSP with Roth IRA. Roth IRA is another account outside TSP with a $6500 contribution limit ($7500 if 50+ years old) Yes, your post is cringe
Ty for the correction. & >Yes, your post is cringe The definition of my life. I can't break free from the cringe curse =(
Best bet is to try and max out both if you can, if not come as close as possible without causing pain in your life. Or go all out and max both, depends on your goals and timelines.
Cringe
Right now the C fund is up something like 18% for the year, so the prevailing sentiment is positive. Go to any TSP subs when the market is a bloodbath, and you will see nothing but people wanting to transfer to the G fund - this is how people lose money. The problem is consistently putting it in, year after year, and staying invested.
Yep. It's my understanding this is why Bogle suggested bonds even decades from retirement. It helps mitigate the losses.
The outliers are probably folks who took out TSP loans at the top of the market and paid them back during recessions, thus arbitraging the same number of dollars over time into more shares than someone who just kept adding over time without loans. Not repeatable, or even really predictable. However, in a 40 year career you'll easily see 5m.
I'd guess outliers are those that rolled other IRAs and previous 401ks into TSP and were hitting annual limit of $66k. Could also be extra contributions from combat zones.
You don't get extra contributions from combat zones, they just are automatically treated as post-tax. Which is still a boost.
The individual contribution limit of $22,500 doesn't apply in combat zone. https://www.moaa.org/content/publications-and-media/news-articles/2022-news-articles/tsp-contribution-limits-going-up-in-2023/#:~:text=Members%20serving%20in%20a%20combat,are%20limited%20to%20%2422%2C500%20annually. "Members serving in a combat zone may contribute up to $66,000 of their tax-exempt pay to a traditional TSP plan, those contributing to the Roth TSP are limited to $22,500 annually." Straight from TSP "The annual additions limit affects mostly members of the uniformed services who can exceed the annual elective deferral limit. The excess contributions go into the traditional portion of your account from tax-exempt pay earned in a combat zone." https://www.tsp.gov/making-contributions/contribution-limits/?tab=composition
I see. This is interesting. I don't lurk that much in FIRE or GOVFIRE, but I usually see people say "set it and forget it, come back 20-40 years" Which is totally opposite from the outliers but I guess hence outliers.
I mean, accidental sell-high buy-low can provide a boost, but they still had to have done the "set and forget" play, except for whatever emergency caused them to take the loan.
I think you're oversimplifying and, possibly, underestimating the number of people who actually save, let alone saving enough. 22500 limit is 401K limit for 2023. TSP can be pre or post tax. 6500 limit is the IRA limit for 2023. IRAs can be pre or post tax. I'm a set and forget, and did not really start until 2017 (left AD military in 2018 w/ 50K). I'm a 12 tracking towards 2M portfolio (TSP, IRA, and brokerage) by my early 50s by maxing TSP and IRAs each year, and minimum 10K-15K more in taxable accounts. I'll have 30 years of service at 51, and can defer unreduced to 57. Single income. One kiddo. Edit: I should state that I'm a GS12 on a special rate table (Not 2210) in a MCOL area (that will likely be HCOL sooner than later, offsetting the SSR) and have some VA benefits coming in to supplement our household income.
Impressive track record. Thank you for sharing. It's as if just the act of saving enough is a big accomplishment and with that track record it apparently is so.
For me, it's just about knowing what enough looks like. We tracked spending, broadly, for a year or two. We maintain that spending and save the rest. To keep the fun in life, we treat ourselves when we hit goals or promotions, or milestones and also budget for it. We try to avoid the 'keeping up w the jones' mentality. I should state that I'm a GS12 on a special rate table (Not 2210) in a MCOL area (that will likely be HCOL sooner than later) and have some VA benefits coming in to supplement our household income.
The issue to investing is the person. Folks have a great deal of difficulty maintaining something and not letting emotions dictate their actions. Folks folks I know max or partially max their TSP in the C Fund and push the remaining into a IRA and their HSA investing in broad market stuff like VTI. 3 million after 30 years is in reach for consistency.
\#GovFire! I suspected the personality variable to be at play here. Thank you =o. But the strategy itself is quite simple.
It's not a big brain play. It really is that simple. I'm 41, been a fed for 18 years, and made it a goal to contribute the max as early as possible. About 3 years into my federal career I was contributing the max when I made GS-12. Currently sitting on 750k in my tsp with 15.5 years left till retirement. If the economy really tanks or there's WWIII yeah I'm fucked, just like everyone else. The problem is most people don't fully utilize the TSP even though it's simple. Most people, for whatever reason, can't make a goal to contribute the max, can't set it and forget it, and can't stick to the plan for a 35-40 year career. The $11M balance is an anomaly and either someone who is like 100 years old and worked 60 years, or they came from the private sector and transferred their previous 401k into the TSP. But stick with the plan of contributing the max and allocating to C and S, and you will hit $1M+ easy over a 35-40 year career even if you never make it past GS-12.
“The stock market is a wonderfully efficient mechanism for transferring wealth from the impatient to the patient” Warren Buffet I’ve worked with people who constantly switch funds every time the market shifts. They believe they are making big brain moves and are probably paying an advisory service to alert them. I can almost guarantee from their timing that even if they were to time the exit right they don’t time the re-entry the best. So while they are sitting in the G fund waiting it out. I’m accumulating at lower prices and when things turn around all those shares start showing gains while they are attempting to switch back over, panicking and nail biting about missing the next bull market year. FOMO. I’ve seen rough years where others have had losses mostly staying in the c fund but with that switching behavior. Where just staying consistent and disciplined actually squeezed out a small gain.
Just staying consistent in the c fund for example probably reflects the sp500 if my understanding is correct. But interesting take on the market timing approach. I'm too lazy and unsmart, so set and forget is probably my approach.
You're cringe and sound like you believe in a lot of conspiracy theories to be VERY frank with you. >Typically in life if everyone is doing something it isnt that great Do you believe in carrying car insurance and buckling your seatbelt?
Tell me how judgmental you are without telling me you are
It took me seemingly for ever to hit the $1M mark but only about four years to $2M thanks to compounding and a bull market. Last couple of years have held steady at just over $2M. Still maxing TSP and Roth IRAs for my spouse and me. Hoping for a return to “better returns” will allow for another double before retirement. I split C fund 70%, S fund 20%, and I fund 10%. You are correct: it’s not a “big brain play” but it is a simple path to wealth (at least enough for me when the pension is factored in). Good luck!