Welcome to TSP Strategies

Welcome to TSPstrategies.com! This Web site is dedicated to exploring the benefits of saving and investing in the Thrift Savings Plan.

The companion book, TSP Investing Strategies: Building Wealth While Working for Uncle Sam, lays out a simple set of strategies for long-term, buy-and-hold investors to consider while investing in the TSP. This Web site and accompanying blog will build on those concepts, while focusing on new investing options and developments related to the TSP.

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Category: Pensions and Social Security

Jan


25

Will Coming Big Changes in Military Compensation Include a TSP Match?

The Military Compensation and Retirement Modernization Commission is set to release its recommendations within the next week.  It will be interesting to see whether the Thrift Savings Plan will play an enhanced role in a modernized military retirement reform package. The commission has been studying compensation for over a year now, and their report is due by Feb 1. The outgoing defense secretary has been making the rounds the last few weeks, letting folks know that the commission’s report is … more

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Aug


19

‘Tick Tock Tick Tock That’s the Sound of Baby’s Clock…’

My young son loves to be read “Baby Listens,” written by Esther Wilkin in 1960.  It’s a “Little Golden Book Classic” edition now.  It’s very lyrical. The first main page of the story shows a baby entranced by an old alarm clock.  “Tick tock tick tock, that’s the sound of baby’s clock…” goes the book. That’s what immediately came to mind when I read the annual Board of Trustees’ Report on Social Security and Medicare, and the CBO’s latest long-term … more

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Jun


24

The Unintended Consequence of Higher FERS-FRAE Payments

Did you experience a 3.6% pay cut this year? Those who just began their civilian federal government service this year did, probably without even knowing it. You’ll recall that lawmakers mandated an increase in contribution rates from new employees’ salaries to pay into the FERS retirement system. The new revised retirement system – “FERS-FRAE” or “FERS Further Revised Annuity Employee” – now requires a payment of 4.4% of new employees’ salaries into the system.  The 3.6% figure represents the difference … more

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Dec


17

Kicking the Can Down the Road, or Kicking the Kid Stuck With the Can Walking Down the Road?

All the discussion about the recent budget compromise has focused on the cuts to Cost of Living Adjustments (COLAs) mandated for recent military retirees going forward.  Under the budget compromise, military retirees under the age of 62 will face a COLA equal to the Consumer Price Index minus one percent. But what of the new govies who, hired in 2014 and thereafter, will have to contribute still more of their pay to retirement contributions?   As expected, in the name … more

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Nov


06

Required Employee Pension Contributions Will Probably Rise Soon

In an under-noticed article inside the Wall Street Journal today – titled “Parties Hunt for Revenue Streams” – was this revelation: “Now, budget negotiators in both parties are again looking to premiums, user fees and other nontax revenue as they try to soften the effect of a new round of automatic federal spending cuts set to kick in at the start of the year.  Possibilities include…raising how much federal employees must contribute to their pension programs, among many others…” And … more

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Aug


24

Ready To Live to 100? Vanguard Thinks We Should Be

Vanguard, the mutual fund company founded by Jack Bogle, earlier this month published an interview on longevity with two retirement experts.  Titled “Ready to live to 100? Here’s why you should be,” the participants discussed the positive and negative aspects of longevity, the need for a “culture of saving,” and the risks of outliving one’s life savings. In one interesting exchange, one of the experts notes that many people “assume that Social Security and Medicare will continue as they are, … more

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Aug


07

Trading a Pension for an Increased TSP Match

The Postal Reform Bill introduced in the Senate last week includes some interesting proposals.  Of note, it includes language that “the bill would allow the Postal Service and postal unions to bargain over the extent of new postal employees’ participation in FERS and the Thrift Savings Program (TSP).” The Washington Post‘s Federal Diary added yesterday that: “A revised [benefit] system might repeal for [future] employees the defined benefit portion of federal retirement benefits, which pays a lifetime annuity based on … more

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Mar


28

Military Retirement and the TSP

It was around this time of year several decades ago that my father began a conversation with me about my future.  I was a high school junior, and like many high schoolers, I had vague plans about traveling, eventually getting through college, and then doing just whatever might come my way. That’s when he talked to me about joining the military.  He had been in the Army by that point almost twenty years.  As upperclassmen in high school, we were … more

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Mar


17

A Rising Retirement Age?

The discussion in Congress and the White House on retirement contributions and minimum retirement ages are not unfounded.  We are living longer and healthier, while the number of taxpayers projected to support the growing population of retirees is falling relative to what it was in the mid-1900s when many of the programs took their current shape. Given the changes in lifespans and worker-retiree ratios, adjustments have to be made. Europe is facing a similar situation.  Populations there are growing older, … more

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Feb


28

If 72 is the New 30, Is 150 the New 70?

Demographers comparing the lifespans of hunter-gatherers to lifespans in the modern era recently reported that the average 30-year-old hunter-gatherer had about the same odds of dying as a Swedish or Japanese man faces at age 72. Media promptly declared that “72 is the new 30,” and posted pictures of famous septuagenarians such as Chuck Norris, Al Pacino, and Raquel Welch – all extremely healthy and active.   The reports hinted at the enticing prospect of living much longer than we currently … more

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Feb


15

Reforming the Military Pension System

Who would’ve thought that the mission to capture or kill Usama Bin Ladin would lead to a debate on the military pension system? This is exactly what has happened following a lengthy interview of “the Shooter” – the Navy SEAL who killed UBL – in Esquire magazine.  According to the article, the Shooter recently left the Navy after 16 years of service, with “[n]o pension, no healthcare for his wife and kids, no protection for himself or his family.”  This … more

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Feb


08

Canaries in the Coal Mine, pt 2

Federal Disability Insurance (DI) is going broke, fast.  That much is clear based on annual reports from the Social Security Trustees’ annual reports, as discussed earlier this week.  While this forum is not about disability insurance per se (or Social Security or Medicare), the rapid increase in DI payouts and other mandatory programs point to the fiscal problems the nation faces in the coming years – and in turn this places continued pressure on federal and military pay and pensions. … more

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Feb


04

Canaries in the Coal Mine

On Friday, the Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 157,000 jobs in January, a middling result for a U.S. economy that shrank by 0.1% in October-December 2012.  The unemployment rate ticked higher to 7.9%. The underreported number, however, is the workforce participation rate, which has declined more rapidly despite the steady job growth over the last four years.  The number of jobs created has not grown enough to offset population growth and to make … more

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Jan


07

The Increasing Costs of Government Pensions

New federal employees joining government service from this pay period will receive a reduction in pay relative to their longer-serving peers.  Those who begin their government service this year will now pay 3.1% to their pensions.  This compares to current FERS employees, who pay 0.8% to their pensions. For someone making $50,000 a year, a 3.1% contribution totals $1,550 or about $130 a month.  This is an increase of $1,150, over the previous 0.8% contribution rate. New employees paying this … more

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