How Safe Is It?

A lot depends on what “it” is and your definition of “safe!”

The financial turmoil of recent days produced two very predictable reactions: First the stock market, which had been down, went up. Then it went down again but not (as of this writing) as far down as it went before it went up.

Unless you are on some very powerful tranquilizer, chances are you are in some stage of concern, ranging from the this-too-shall-pass phase to the-end-is-near (if not already here) stage!

Congress, in a rare display of bipartisanship, seems to be interested in finding a “solution” before it slips back into the inevitable blame game. Many experts say that none of the options are good, but some are worse than others. Many of us probably agree that the CEOs who led this parade over the cliff should, at the very least, learn to live on a GS 11 salary, if that much.


Many federal TSP investors are worried. Some want to be soothed. Others resent (or don’t believe) information that they are in relatively good shape compared to many private sector workers and investors. Monday’s column was about the “safety” of the TSP.

Here are some comments including one from a close-to-retirement fed:

Q: I am invested in the L2010 fund hoping to retire within two years. I am afraid to look at my new balance. How did this one fare? Francis M.

A: As a federal worker, when you retire, you will have a government-backed lifetime annuity. CSRS is fully indexed to inflation, FERS is partially-indexed. CSRS retirees are looking at a 6 percent cost of living adjustment in January. FERS retirees would get 5 percent under their formula. Most Americans don’t have a pension and, if they do, virtually none of them have any inflation-protection. In your 2010 fund, 43 percent is in the super-safe Treasury G-fund; 7 percent in the bond index F-fund; 27 percent in the S&P 500 C-fund; 8 percent in the S-fund (small cap index) and 15 percent to the international index I-fund. A lot can happen – good, bad or both – in two years. When to retire is your call! MC

Another reader found the column overly soothing. He writes:

An investor in US and/or foreign stocks doesn’t have to have owned Fannie or Freddie stock, nor that of AIG or Lehman, to have taken a beating from what has been happening in financial markets over the past couple of weeks. You may mean well with the reassurance you offer TSP investors, especially those in equities, but you should leave the financial advice giving to professionals. (And note more has happened in financial markets in the 10 days since that comfort letter was written than has happened in financial markets in any 10 day period since the Great Depression.) M. Louis Offen, MD, MPH, JD Rockville, Maryland

Sick Leave For The Well

Just a reminder, sick leave isn’t just for when the employee is sick. Under Family Friendly Leave, employees can now legitimately use sick leave for sickness of relatives, elder/child care, newborn/adoptions, funerals, doctor’s appointments, etc. Al K.

R-Fund, Dot.Com Fund

Remember past efforts to add more sector funds to the TSP? One reader does. His comment:

Whatever happened to those vociferous folks who wanted to add a Real Estate investment to the TSP options? They’ve been pretty quiet. Barry Reichenbaugh

Ironically, with real estate in the tank, this might be a good time to buy into an R (real estate investment trust fund) if you had the time (and the stomach) to watch it recover and grow.

Nearly Useless Factoid

Only one of the fifty states has a single syllable name: Maine.

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