16,000 self-made fed millionaires

If your image of the typical federal bureaucrat is a plodding middle-aged man (or woman) who couldn’t make it big — or maybe even at all — in the rmeal world, think again. As in, how many rank-and-file millionaires are there where you work?

Thanks to a surging stock market and a steady-as-she-goes investment strategy, an eye-popping 16,475 federal workers now have Thrift Savings Plan accounts worth $1 million. And in some cases, much more.

Unlike the early days of the federal 401(k) plan, when all the big accounts belonged to wealthy political appointees (many of them lawyers turned federal judges) who brought their 401(k) and other retirement vehicles into the federal TSP, which has the lowest fees in the business.

The new crop of do-it-yourself millionaires nearly all has one thing in common. They’ve been investing since they first joined the government, they’ve stayed with the stock-indexed C and S funds, and they stayed with those funds, and continued to buy more each pay period, even at the bottom of the Great Recession. By contrast, hundreds of thousands of federal and retiree investors left the then-tanking stock-indexed funds and moved some or all of their money into the super-safe (super-dull) Treasury securities G fund. Even worse — at least so far — they continued to buy only G fund shares when the entire U.S. stock market (as covered by the C and S funds) was on sale.

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The other thing the self-made TSP millionaires had in common is that if eligible, they took advantage of the 5 percent match the government puts into TSP accounts if investors put in at least that much. Over time, that match, the equivalent of a tax-deferred 5 percent pay raise each year, pays off big time.

So how big time?

  •  In January 2016, there were 4.7 million participants with TSP accounts. As of Aug. 15, 2017, there were 4.9 million. This includes both active-duty federal workers and military personnel, retirees with TSP accounts and former feds who’ve kept their 401k nest-egg in the federal program.
  • In 2016, there were 3,272 TSP millionaires who had been investing for an average of 28.5 years. As of this month, the number of million-dollar TSP accounts had jumped to 16,475. Their average number of years of investing had jumped slightly to 28.8 years.
  • The number of feds knocking on the million-dollar door (with account balances ranging from $750,000 to $999,000) rose from 18,846 in January 2016, to an amazing 46,088 this month. And they did it all by themselves, with a little help from the stock market, which many experts predicted would tank, especially if you-know-who got elected (and did get elected). While there has been a so-called Trump (as in President Donald J.) impact, it is not what most pundits predicted … or perhaps hoped for.