Women and
Investments
Understanding the Thrift Savings Plan’s Role in Your Retirement
Presented by:
Tammy Flanagan
Tammy@nitpinc.com
Resources for
YOU
www.narfe.org
Famous Wealthy Women
Jacqueline
Mars
Granddaughter
of Frank Mars
$23.5 Billion
Alice Walton
Christy Walton
Daughter of
Sam Walton
Daughter-InLaw of Sam
Walton
$35.6 Billion
$39.2 Billion
http://www.slate.com/articles/business/billion_to_one/2013/11/the_world_s_top_50_billionaires_a
_demographic_breakdown.html and http://www.forbes.com/sites/clareoconnor/2013/09/16/insidethe-world-of-walmart-billionaire-alice-walton-americas-richest-art-collector/
Closing the Confidence Gap:
Women and Investing
Get in the game
• Take FULL advantage of the TSP
• Start early and save more
Make “friends” with risk
• Why are you playing it safe?
• Understand the REAL risk
Communicate
• Knowledge breeds confidence
• Ask questions until you understand
Collaborate
• Make financial decisions together
• Be accountable
http://www.forbes.com/sites/northwesternmutual/2014/05/07/closing-the-confidence-gap-women-and-investing/
More Americans Living to 90, U.S. Census Finds
• More Americans are living to 90 and beyond,
and by 2050 their ranks could reach almost 9
million, a new U.S. Census Bureau report finds.
• In fact, the number of nonagenarians has
nearly tripled -- from 720,000 in 1980 to 1.9
million in 2010, researchers found.
• Most of them -- 74 percent -- are women.
http://health.usnews.com/health-news/family-health/boomerhealth/articles/2011/11/17/more-americans-living-to-90-us-census-finds
FERS Basic
Retirement
and FERS
Supplement
Your
Federal
Retirement
Social Security
Thrift Savings
Plan
Income Replacement
30+ Years of
Service: 30 %
or more
Full Career
(LEO): 34% or
more
Low Wages:
50%+
$200,000:
$8,000 /year
Medium
Wages: 35 –
40%
$500,000:
$20,000/year
High Wages:
25% or less
$1,000,000:
$40,000/year
Top Sources of Retirement Income
(36% of respondents were women out of 5,413)
Respondents could choose up to 5 sources
Active Participants only
CSRS
FERS
Government Retirement (CSRS or FERS)
94%
58%
TSP Account
72%
70%
Pension plan or 401(k) from previous employer
6%
15%
Social Security
23%
66%
Income from continuing to work in retirement
18%
16%
Mutual funds, stocks, bonds or other brokerage accounts 19%
13%
Other personal savings
17%
13%
IRA accounts
11%
12%
Income from spouse (or other family members)
18%
9%
Home equity
8%
6%
http://www.frtib.gov/pdf/survey/participant/TSP-Survey-Results-2013.pdf
Top Sources
How to Invest for Retirement
• Don’t Follow
– People tend to buy high and sell low
– What’s hot!
– “Be fearful when others are greedy and be greedy when
others are fearful.” Warren Buffet
• Stick to Your Plan
– Regular and automatic is best
– The market is now reaching new highs – even after 2008
• Keep Costs Low
– TSP = $.29 / $1,000 / year ($500 x $.29 = $145 / year)
• Ignore Financial News
– If you did nothing in 2008, you would be better off today
– Doing nothing can make you look brilliant!
Where Can I Learn More?
What Do You Think of the Thrift Savings Plan?/
• The TSP is simple
• The TSP is cheap
• The TSP includes a
special deal
• Warning: Why
some financial
advisors hat the
TSP
Learn More, Fear Less
• 88% of FERS employees
contribute to the TSP
• More than 25%
contribute less than 5%
• 36% of TSP is invested
in the G Fund (May
2014)
• Average FERS Account
balance:
• Traditional:
$111,245
• Roth: $4,674
• 27% of TSP invested in
the C Fund (May 2014)
• Standard & Poors 500
Index
• What’s In:
• Michael Kors
• Google
• Under Armour
• General Motors
• What’s Out:
• J.C. Penney
• Sears
• H.J. Heinz
• Big Lots inc.
• 10.27% annualized return
over 25 years (1988 – 2013)
• 10% of TSP invested in
the S Fund (May 2014)
• Dow Jones U.S.
Completion Total Stock
Market Index
• Represents all U.S.
publically traded
stocks, excluding
components of the S&P
500
• 4,500 companies
• Index started 1987 –
same year TSP started
• S Fund added to TSP in
2001
• 6% of TSP invested in
the I Fund (May 2014)
• EAFE acronym stands
for Europe, Australasia
and Far East
• 21 Developed markets
excluding Canada
Austria, Belgium, Denmark,
Finland, France, Germany,
Ireland, Italy, the Netherlands,
Norway, Portugal, Spain,
Sweden, Switzerland, United
Kingdom, Israel, Australia,
New Zealand, Singapore, Hong
Kong, and Japan
• 5% of TSP invested in the I
F Fund (May 2014)
• Barclays Capital U.S.
Aggregate Bond Index, a
broad index representing
the U.S. bond market
• Heavily invested in
government bonds
• G Fund buys a
nonmarketable U.S.
Treasury security
• Those “in-the-know” tend
to invest in actively
managed bonds rather
than index funds
Not sure?
G
F
C
I
S
Lifecycle Fund
16% of TSP Invested in L
Funds (May 2014)
Allocation of L 2050 Fund
G Fund
F Fund
S Fund
I Fund
11%
C Fund
4%
25%
18%
42%
As of July 2014
Allocation of L Income Fund
G Fund
F Fund
S Fund
I Fund
C Fund
3%
5%
12%
6%
74%
Lifecycle Quiz
• I should choose the fund closest to my
a) Retirement Date
b) Date of death
c) Date I will begin to use the money
Lifecycle Quiz
• I should choose the fund closest to my
a) Retirement Date
b) Date of death
c) Date I will begin to use the money
Lifecycle Quiz
• The best way to invest in Lifecycle Funds is to:
a) Keep 50% in G and the rest in the L Income
b) Choose one or two Lifecycle Funds that are
appropriate for my retirement goals
c) Diversify between all 10 TSP investment options
Lifecycle Quiz
• The best way to invest in Lifecycle Funds is to:
a) Keep 50% in G and the rest in the L Income
b) Choose one or two Lifecycle Funds that are
appropriate for my retirement goals
c) Diversify between all 10 TSP investment options
Start Early and Don’t Stop
Learn more at TSP4gov
•
•
•
•
•
•
Is Roth TSP Right for Me? (Civilian) by TSP4gov
Take 5 for Your Future
The Cost of Taking a TSP Loan by TSP4gov
Investing in Bonds by TSP4gov
10% Early Withdrawal Penalty Tax by TSP4gov
Combine and Save: Transfer Into the TSP by
TSP4gov
• Contribution Allocations and Interfund Transfers
by TSP4gov
Plans for Withdrawing Money From
TSP – Separated Participants
http://www.frtib.gov/pdf/survey/participant/TSP-Survey-Results-2013.pdf
Monthly Payments
Balance: $500,000 Growth: 5%
Dollar Amount
• $3,000 / month
– Run Out at age 78
• $2,000 / month
– Balance at age 100:
$209,484.99
Life Expectancy
Monthly
Age
Balance
$1,407.66
55
$508,224.49
$2,208.64
65
$557,817.99
$2,069.36
75
$572,237.19
$3,095.55
85
$539,728.21
$3,612.99
95
$347,388.27
$3,166.00
100
$212,558.69
How about an annuity?
Features
•
•
•
•
•
•
•
$500,000 purchase
Begin at 55
Single Life
2% Interest Rate Index
Level Payment
No Cash Refund
2.62% Interest Rate Index:
$2,219 / mo.
Payments
Monthly
Age
Balance
$1,980
55
$0
$1,980
65
$0
$1,980
75
$0
$1,980
85
$0
$1,980
95
$0
$1,980
100
$0
How about an annuity?
Features
•
•
•
•
•
•
$500,000 purchase
Begin at 55
Single Life
2.62% Interest Rate Index
Increasing Payment
Cash Refund*
Payments
Monthly
Age
Balance*
$1,305
55
$0
$1,753
65
$0
$2,356
75
$0
$3,166
85
$0
$4,256
95
$0
$4,933
100
$0
*If you die before the amount of your TSP balance used to purchase your
annuity has been paid out, the remaining amount will be paid in a lump sum.
http://www.washingtonpost.com/business/as-brokers-urgeira-rollovers-ex-workers-ditch-their-low-fee-federalretirement-plan/2014/08/14/53c68dd0-2239-11e4-958c268a320a60ce_story.html
The pitches are persuasive.
Workers who leave jobs
with the federal
government transferred
$10 billion last year out of
the Thrift Savings Plan.
Forty-five percent of
participants who left
federal service in 2012
removed all of their funds
from the plan and closed
their accounts by the end of
2013. To investigate this
exodus, the government
expects to survey departing
workers later this year.
Plans for Transferring Money From TSP
http://www.frtib.gov/pdf/survey/participant/TSP-Survey-Results-2013.pdf
Reasons For Keeping Money in TSP
http://www.frtib.gov/pdf/survey/participant/TSP-Survey-Results-2013.pdf
Questions?