TSP Millionaire Count Falls Again

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Only about six-tenths of TSP account holders who had at least $1 million on investment at the start of the year now can say the same, with the number falling to 65,494 in the latest accounting, through September.

That’s down by some 7,000 from the count through June, by more than 47,000 from year-end 2021 and by about 33,000 over the 12 months since September 2021.

Compared to year-end 2021, the 81,557 with accounts between $750,000 and $1 million and the 187,615 between $500,000 and $750,000 are down by about 24,000 and 33,000, while the 513,037 with accounts between $250,000 and $500,000 are down by about 25,000.

The largest TSP account as of September was just under $6.5 million, while as of year-end 2021 the largest account — possibly, but not necessarily, the same one — was just under $11 million.

The TSP recently reported separately that through September the average account balance for those under FERS had fallen about $30,000 to about $150,000 at the start of the year, while the average CSRS investor account had fallen by nearly as much to about $169,000.

The TSP stock funds posted strong gains in October, however.

Citation: FedWeek
Published: November 8, 2022

What Happens if You Leave Money in the TSP After Separation

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At some point in the future, you will separate from federal service. After you separate you will be able to withdraw money from your Thrift Savings Plan account. The TSP doesn’t care why you separated, it might be due to retirement, or you may choose to resign prior to becoming eligible for retirement. Regardless of the reason for your separation, don’t expect immediate access to your funds; you must clear the payroll system first. It usually takes around thirty days before the TSP is even aware that you have left federal service.
Many separated employees will choose to roll (transfer) their funds into an outside IRA or other tax deferred account. But you can also leave your funds in the TSP if you want (the Thrift Board encourages you to not transfer your funds out of the TSP). The rest of this article will discuss what happens if you leave your money with the TSP. Please click HERE to read more.

The Fed just hiked interest rates by 0.75% for the 4th straight time

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The Fed just hiked interest rates by 0.75% for the 4th straight time — escalating fears of a global recession. But here’s why soon-to-be retirees shouldn’t panic

The Fed just hiked interest rates by 0.75% for the 4th straight time — escalating fears of a global recession. But here’s why soon-to-be retirees shouldn’t panic

The Fed just announced its sixth rate hike this year — and some economists predict future increases will take the key rate to over 5%, triggering a recession in 2023.

The federal funds rate has already jumped three percentage points since March, with the newest 0.75% raise closing in on a range of 3.75 to 4%.

It’s becoming more expensive to borrow even as stubborn inflation keeps prices high, and Americans are feeling the strain on their retirement savings.

In fact, four in 10 older Americans are delaying retirement in the midst of challenging economic conditions, according to the Nationwide Retirement Institute — double those who were pushing back retirement last year.

Click HERE to read more.

October Returns a Treat for TSP Stock Fund Investors

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All three stock-based TSP funds posted strong gains in October, led by the small company stock S fund, up 8.59 percent and followed by an 8.1 percent gain in the large company stock C fund and a 5.98 percent gain in the international stock I fund.

Despite the gains, those funds still are down year-to-date by 23.83, 17.7 and 22.9 percent, respectively; for the last 12 months they are down 27.24, 14.61 and 22.74 percent.

The bond F fund dropped 1.26 percent in October, for a year-to-date loss of 15.38 percent and a 12-month loss of 15.4 percent. The always-gaining G fund rose 0.34 percent in the month and is up 2.29 percent for the year and 2.55 percent over the last 12 months.
Click HERE to read more.

How Not to Lose Your FEHB in Retirement

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Federal employees can lose FEHB coverage in retirement unless they meet certain criteria.
Yep, you heard right. Not everyone can keep FEHB (your federal health insurance) into retirement.

Eligibility to Keep FEHB Into Retirement
There are two big criteria that you have to meet to keep FEHB into retirement. You must:
• Retire with an immediate retirement
• For traditional FERS, this includes retiring with at least:
• 30 years of service at your MRA (minimum retirement age)
• Or 20 years of service at age 60
• Or 5 Years of service at age 62
• Or 10 years of service at your MRA (MRA+10 Retirement)
• You also need to have been covered by FEHB continuously for the 5 years before retirement.

What If Spouse is Also a Federal Employee?
If your spouse is also a federal employee, then it doesn’t matter who is officially carrying the FEHB plan as long as you are covered under FEHB for the 5 years before retirement.

For example, let’s say you and your spouse are feds and you are the one that has a Self+One plan that covers both you and your spouse. As long as your spouse retires with an immediate retirement then they’d be able to keep FEHB into retirement on their own record if they wanted.

But…

But where people get into trouble is when they choose to be on a spouse’s health insurance who is not a federal employee. In this situation you will just want to make sure you jump back on FEHB at least 5 years before retirement.

What if I’m on Tricare? Exception to the 5 Year Rule
Those on Tricare have an exception to the 5 year rule. If you have Tricare then that can fulfill the 5 year requirement as long as you are covered under FEHB on the day you retire.

For example, let’s say you have Tricare for the 5 years before retirement but you also jump into FEHB in the last year of retirement. In this case you’d be eligible to keep FEHB into retirement because your Tricare fulfilled the 5 year rule and you had FEHB at retirement time.

Leaving FEHB for Your Spouse
So now that you’ve successfully retired and taken FEHB with you, the next thing you want to make sure is that your spouse can continue FEHB even after you kick the bucket.

The one big requirement is that you elect a survivor benefit on your pension for your spouse. So no survivor benefit, no FEHB for your spouse, at least after you pass.

The survivor benefit is chosen (or not chosen) on your retirement application.

Here are the 3 survivor benefit options, and as long as you pick one of the first two then you and your spouse are good to go.
1. Full Survivor Benefits: It costs you 10% of your pension and your spouse is left with 50% of your pension if you pass first
2. Partial Survivor Benefits: It costs you 5% of your pension and your spouse is left with 25% of your pension if you pass first
3. No Survivor Benefits: It costs you nothing and your pension goes away when you pass.

Citation: FedSmith: October 27, 2022 10:26 AM