Thrift Savings Plan Growing and Changing
At the Thrift Savings Plan, 2007 was a year of growth and 2008 looks like a year of change.
The TSP's stock, bond and government securities funds posted gains in 2007. Leading the way was the international stock index fund, with an 11.43 percent rate of return. The next biggest winner was the bond fund, which rose 7.09 percent.
The fund with the largest assets, the government securities fund, turned in a 4.87 percent gain. The plan's large company stock fund rose 5.54 percent, and the small company stock fund was up 5.49 percent.
Assets held by the funds jumped during 2007, to $231.6 billion in December from $210.3 billion in January. The plan's stock funds lost money last month because of volatility in the U.S. and international markets.
The Thrift Savings Plan, a 401(k)-type retirement program, has more than 3.85 million participants -- from the civil service, the U.S. Postal Service and the armed forces. About 2 million TSP participants are covered by the Federal Employees Retirement System, created in the late 1980s to replace an older, traditional pension plan.
The plan's executive director, Gregory T. Long, thinks it is possible for large numbers of investors to have about $1 million in their accounts at retirement.
TSP data shows that FERS participants in the 40-44 age category and with 20 years of federal service have an average account balance of $138,616.
In Long's scenario, these employees earn $70,000 and contribute 8 percent of their salary to their TSP account. They are 42 years old and will make contributions until they are 62. If their contributions and investments grow by 7 percent over that 20 years, Long projects these employees would end up with $955,488 in their accounts.
The average account balance in the TSP, however, suggests that many employees need to keep saving for a comfortable retirement. The averages reflect savings by long-time government employees, who have had time to build up a nest egg; newly hired employees, who have just started making contributions; and the military, which became eligible to participate in the Thrift Security Plan in 2002.
The average Federal Employees Retirement System account balance was $73,329 at the end of November, the latest data available.
The average balance for employees in the Civil Service Retirement System, which is being phased out, was $65,282. For the military and other uniformed services, it was $9,441.
FERS employees and military personnel continue to join the Thrift Savings Plan every month, increasing overall enrollment. The number of Civil Service Retirement System employees in the TSP is declining, primarily because of retirements.