The biggest monthly drop was in the International Stock Index I fund, which fell from 1.19% in May to -8.21% in June. Although the I fund also dropped in June 2021, year over year it was down by 6.77 percentage points.

The second-biggest monthly drop was in the common stock index C fund, which ended June at -6.55% compared to -1.65% in May. The small cap stock index S fund had a return of -7.95% in June compared to -3.53% in May, and the fixed income index F fund posted returns of -1.94% last month compared to 1.13% in May.

Overall, the TSP was down from a year ago and this year, record inflation has affected many sectors of the economy especially energy and food. The Bureau of Labor Statistics reported that from May 2021 to May 2022, the Consumer Price Index for All Urban Consumers increased 8.6%, which is the largest 12-month increase since the period ending December 1981.

Things are not looking much better in the Lifecycle funds, all of which had declining monthly returns in June. The biggest monthly decrease was in the L 2055, 2060 and 2065 funds which ended at -7.25% in June compared to -0.89% in May. The smallest decline was in the L Income fund, which dropped from 0.04% in May to -1.60% last month.

Aside from the L Income fund, Lifecycle funds have remained in the red since April.

Stuff happens. And when it does, the steady-as-she-goes investment advice often makes less sense than it did in better times. For many people, dating back to World War I, Treasury securities have been a steady part of their personal financial planning.

For workers under the FERS retirement program, the TSP could supply anywhere from one-third to half of the income they have in retirement. Unlike their annuity, and Social Security, the TSP is not protected from inflation. But many experts say that in addition to fully funding their TSP, feds should consider other super-safe options to pad out the nest egg. Millions of people still have paper certificates. But bonds are now also electronic. And the bonds are an even better deal.

One such option is a treasury bond suggested by financial planner Arthur Stein in March. At that time it was paying 7.1%.

More recently, the Washington Post’s Michelle Singletary told feds how to get a Treasury security paying 9.62%.

Then there are also more traditional savings bonds as a nest-egg booster. Retiree Abraham Grungold, a very successful TSP investor, is now a full-time financial coach. Among other things, he’s been helping feds and retirees who had — and lost — actual paper bonds with how to get their money back. It’s a big problem, especially with older investors whose only option at the time was the paper trail. Fine, until they lost track of them. Then what? Here’s what he recommends:

For many, savings bonds have been a part of our lives. We have purchased and or received them for the birth of a child, wedding gifts, saving for college, and saving for retirement. Historically, you purchased them at your local bank and received a paper bond from the Treasury Department. For the past few years, the method to purchase savings bonds can only be transacted through the Treasury Direct website.

In the past, federal employees participated in the U.S. Savings Bond Drive and purchased bonds through their payroll allotments. I purchased bonds during my 36-year federal career and even recently in retirement. I started with 50 and 100-dollar bonds. Then I moved up in denominations, because it was easier to accumulate larger size bonds instead of a lot of smaller ones. I owned dozens of them. I kept a detailed list of them. Over the years, I cashed in many of them if I needed to make a major purchase or once they matured after thirty years. At maturity, the bond will stop accruing interest. Once you cash them in, you must pay federal tax on the interest earned. The IRS will send you a 1099.

Recent reports have shown that there are unclaimed savings bonds valued at approximately $25 billion. These matured bonds have never been cashed and no claim has ever been made by a beneficiary. And what happens if you lose the paper bonds? I had a client who contacted me about their lost bonds. They lost 72 paper bonds. The total value was approximately $694,000. It took me eight months dealing with the Treasury to have all of them recovered back into the hands of my client.

So why did it take so long and what do you need to be aware of?

Starting the process

You first need to start with a FS Form 1048 Claim for Lost, Stolen, or Destroyed United States Savings Bonds. The Treasury assigns you a case number, and then the many hurdles and challenges begin. Some of the following issues require specific forms and need to signed and notarized.

Owner

The Treasury needs to identify who is the owner of the bond. It may have only one owner, co-owners or the bond may have been gifted to someone. This is a critical issue.

Verification

If the bonds are lost, a search is performed on the owner’s Social Security Number. On paper bonds, if the SSN was incorrectly typed on the bond, that means that the bond is unverified. The only way to verify a bond without the correct SSN is with the bond’s full serial number. A closer review of the bond would then need the owner’s name. My client had 12 bonds valued at approximately $100,000, and the Treasury stated that they were previously cashed. We had the full serial numbers, so the Treasury did a separate search and found all 12 bonds which were then verified as not yet cashed. If you do not have the full serial number, then the bond may be lost forever.

Reissued and Matured Bonds

Bonds which are verified can be reissued to the owner in a Treasury Direct account. The Treasury will not reissue a paper bond. If a bond reached the full maturity of 30 years, then it cannot be reissued; it has to be cashed out and the proceeds are given to the owner. My client had 48 fully matured bonds and 24 reissued bonds. In the event these 72 paper bonds resurface, they cannot be cashed.

Communication

Although the steps sound fairly straight forward, the Treasury is short staffed and overwhelmed with these requests. Contacting the representative assigned to the case is a frustrating challenge. Due to security issues, you are not provided with their last name, you cannot leave a voice mail, you cannot send an email, and no texting. Wait times to speak to another representative are 90 to 120 minutes. Regular mail takes weeks to process due to the COVID-19 protocols. I found the best way was to send a fax with the case number and it reached the case representative quickly. The follow-up to the fax was either a phone call or an email from the Treasury representative.

My presentation of the 72 bonds and my calculations were accepted by the Treasury representative without any challenge. The successful outcome was that my client received every dollar owed to them, but that was largely due to the record-keeping they maintained over 30 years. My suggestion to anyone attempting this on their own is to be patient, tenacious and keep a chronological log of the steps you have taken along the way. You want to keep a copy of the records mailed and or faxed.

Nearly Useless Factoid

By Daisy Thornton

Source: Scientific American

If you are working, retired, building a nest egg or living off one, these are tough emotional times. If you want good news, you’ve learned to avoid the financial news or stock market reports. Also national news, international news and, if you are a baseball fan in certain cities like Washington, D.C., you avoid the sporting news, too.

Hopefully you have a good cable package and a personality that lets you sort and live with the good news vs. the not-so-good-news. Which is the purpose of today’s Your Turn radio show: It’s a double-header on the good, the bad and the ugly. We are going to try to cover the waterfront. Our show begins at 10 a.m. EDT on www.federalnewsnetwork.com or 1500 AM in the Washington-Baltimore area. First up, financial advisor Arthur Stein will talk about the future course of your TSP account, and the pros and cons of investing heavily in the never-has-a-bad-day G fund. Many consider it the “safest” investment. But that begs the question: How do you define “safe” when building a retirement nest egg? Federal News Network reporter Drew Friedman will talk about the very latest on the federal pay raise. Then we’ll get into the prospects for a large retiree COLA. Last, but definitely not least, the issues TSP investors are having with the new system.

Hopefully this has something for everyone. Here’s a preview from Arthur Stein on the place of the G-fund in your TSP portfolio:

There are two advantages to the G-fund: Zero volatility and all holdings are guaranteed by the government.

However, G (and F)-fund investors need to recognize that, historically, long-term investments in the G and F-funds lost purchasing power. G-fund annual returns have gradually declined since it was introduced in April of 1987. In 2021, the return was 1.4%, 84% lower than in 1988. The cost of living (inflation) more than doubled over this period.

That leaves TSP participants with a dilemma. Should they invest for:

• The lower volatility and lower chance of losing principal (“safety”) offered by the G and F (bond) funds, and accept the higher chance of declines in purchasing power; or
• The higher potential growth historically offered by the stock funds, accepting higher volatility and market declines for the opportunity to increase purchasing power?

Nearly Useless Factoid

By Daisy Thornton

Source: Sci News

During that early 2000s super Bear Market, millions of investors lost billions of retirement nest egg dollars. The stock market plunged almost 50%. A heart-stopper for most investors. Especially if they are close to retirement, and even more so if already retired on a fixed pension. Many moved their TSP and 401(k) into “safer” bonds or treasury securities to protect them from losses. But they missed out on the stock market rebound.

Many private sector employees were also forced to take pay cuts ranging from 5-25% in order to protect their jobs. And some companies — including several well-known investment management giants — stopped giving their own employees matching 401(k) contributions, so they could stay afloat. Federal workers did without pay raises for two years. But there were no recession-triggered layoffs. In fact, many agencies grew. The TSP continued to give investors a matching government contribution of up to 5%. Further proof that it’s nice to be in a plan that covers members of Congress too. And workers with enough time in service continued to get WIGs (within-grade raises) worth about 3% every one, two or three years based on their time in government.

Benefits expert Tammy Flanagan said don’t focus entirely on the next recession, whether it is two years, or two weeks, away. Her advice: “What about the next recession. And the next few recessions? Be prepared because it is always something: War, recession, the roof of your house caves in. Always something.” Her advice, particularly for people who are retirement eligible or close to retirement is: Think about waiting. Maybe a delay of two years. In an earlier column, she pointed out that an $80,000 per year fed who works an extra two years — from 60 to 62 — will boost their starting annuity by almost $30,000. That’s also important because while CSRS retirees get full cost of living adjustments no matter when they retire, FERS retirees don’t get any COLA until age 62. Then it’s minus 1% if inflation exceeds 3%. Currently it is running much, much higher. So are you ready? For retirement, the next recession, or both? The Employee Benefit Research Institute says many retirees — federal and private — are not well prepared for retirement. Among other things it says:

• Many retirees say they wish they’d saved more. They may seem obvious but by the time you’ve learned that lesson it may be too late.
• Also, most retirees seem to do better if they have a financial advisor, though many don’t. Or didn’t until later.
• The EBRI also says that 9 out of 10 retirees who have financial advisors feel the value they got “outweighed the cost” of such an advisor.

Nearly Useless Factoid

By Daisy Thornton

Source: World Wildlife Fund

When is the last time you and your significant other took a romantic weekend to rekindle the fire? And spent most of the time, at the beach or in the mountains, talking about the pros and cons of an irrevocable trust?

Wild guess: How about … never?

Although vitally important in some cases, irrevocable trusts are sort of like heel spurs or picking kitchen paint colors as a topic of extended conversation. And yet …

There may come a time in your family’s life when having the should-I-have-a-trust conversation is critical. Whether you did it, or especially if you didn’t do it but should have!

All this is a sneaky way to lead into today’s Your Turn radio show. And while the subject doesn’t automatically draw your attention, in many cases it should. What such a trust is, and whether it is vital or useless for you and yours is something you have to deal with while you are still around. It won’t wait until after you’ve gone and mourning — maybe fighting — loved ones are dealing with your estate which, by the way, even the most modest feds have. Today at 10 a.m. we’ll be talking with Tom O’Rourke, a Washington area tax and estate attorney. Many of his clients are current or retired feds. Some need a trust. Some should avoid it. So how do you know? Here’s Tom’s explanation of what it is, and why you may need one. Or not. The show is at 10 a.m. on federanewsnetwork.com or 1500 AM in the D.C.-Baltimore area. The show will be archived on our home page so you can listen anytime or refer it to a coworker. If you have any legal questions about wills or trusts send them to me before showtime: mcausey@federalnewsnetwork.com

Irrevocable trusts are commonly used as part of a comprehensive estate plan, but they are not for everybody. They have significant tax and legal consequences and should only be entered into after considerable thought and with the guidance of a knowledgeable advisor. Once an irrevocable trust is signed and funded, it cannot be revoked or changed.

Irrevocable trusts allow you to accomplish several important goals. They can be used as a tax-planning tool, they can provide a vehicle for managing assets for the benefit of a person who is not capable of managing their own assets, and they may be used to protect assets from the claims of creditors.

Some of the more common tax planning trusts include a life insurance trust, a QTIP trust, and various types of charitable trusts. For many individuals, however, tax planning is no longer an issue. The federal estate tax exemption is now $12 million per person. Many states either have eliminated their estate tax, or have significantly increased the exemption amount.

Irrevocable trusts are also commonly used to accomplish non-tax goals. Some of the more common irrevocable trusts include a trust for a minor child, an education trust, a special needs trust for a handicapped adult child, a trust to protect an inheritance for a spendthrift child, or a trust to protect a child’s inheritance in the event of his or her divorce.

Irrevocable trusts also have a number of disadvantages including the following:

1. You must irrevocably give up the right to control the assets transferred to the trust.
2. It is a separate tax and legal entity and it is advisable to seek guidance from a knowledgeable advisor to make sure you are not falling into a tax trap.
3. It is often more expensive than using other less complex estate planning tools.

While irrevocable tools are certainly available to help you accomplish your estate planning goals, they should only be used after you have considered all advantages and disadvantages, and had the benefit of professional guidance.

-Tom O’Rourke

Nearly Useless Factoid

By Daisy Thornton

Source: Amusing Planet

Consider:

If you get invited to enter the Kentucky Derby, bring a horse.

If you want to make butter, a Jersey cow is the way to go.

To the untrained city slicker’s eye cows and horses are pretty much the same. But in fact they are very different. And that same big differential applies to pay raises vs. cost of living adjustments. Two very different things. And that difference can be critical in a time like now when inflation has taken off, prices for everything are going up and prospects for the future are dim. If you are still working, but eligible to retire, is this a good time? Because of the diet-COLA feature for FERS retirees a long period of inflation can eat into the buying power of an annuity. And if you are eligible or close to retiring this year or next you need to do some homework.

Most federal workers are looking at a minimum 4.6% pay raise in January 2023. Congress might even boost it to 5.1%. Depending on how the political winds blow between now and November.

The amount of the retiree COLA is to be determined but right now it looks like a minimum of 8.6%. But it could be more, or less, depending on what path inflation takes between now and September. That would mean an 8.6% increase for Social Security and CSRS retirees but “only” 7.6 for FERS retirees. That’s a lot. It would be the biggest in years. But its going up because prices are too. And the system used to measure inflation doesn’t take into account many of the added costs of older, retired people. Solution: Maybe you should defer your retirement a couple of years.

Benefits expert Tammy Flanagan says someone making $80,000 a year can boost his or her starting annuity by $30,000 by working just two more years. That’s a nightmare prospect if you hate your job, boss, coworkers or community. But its money in your pocket for life, if you hand on. And it’s linked to inflation. Here’s the example showing the magic of deferring your retirement, especially during a time of skyrocketing inflation:

• Length of Service at age 60: 19 years

  • 19 x $80,000 x 1% = $15,200 x .90 = $13,680 (10% reduction under the MRA + 10 retirement because employee didn’t have 20 years of service at age 60 to qualify for an unreduced retirement)

• Length of Service at age 61: 20 years

  • 20 x $80,000 x 1% = $16,000 + $12,000 = $28,000(The extra $12,000 represents a FERS supplement of $1,000 a month payable to age 62 when retiree could file for SSA and get an even larger SSA benefit based on their lifetime of FICA taxed wages)

• Length of Service at age 62: 21 years

  • 21 x $80,000 x 1.1% = $18,400 + $24,000 = $42,480(The $24,000 represents the SSA benefit payable at age 62 of $2,000 a month from their lifetime of FICA taxed wages)

The difference between this person leaving at 60 vs. 62 is almost $30,000 a year more income for only two more years on the job. Of course, at age 62, the person who left at age 60 could claim their SSA benefit, but the gap would still be close to $5,000 a year or $600 a month in their FERS basic retirement benefit for life! In addition, they would have benefited from two more years at their presumably highest earning years added to their SSA record, and two more years of contributions and growth to their TSP accounts. A win-win, for many. –Tammy Flanagan

Nearly Useless Factoid

By Daisy Thornton

Source: Wikipedia

When Social Security was launched in 1935, the average life expectancy for men was 59.9 years and 63.9 for women. Full benefits started at 65, so do the math! It sounded almost like a safe, government-guaranteed Ponzi Scheme, minus the scheme part.

But times have changed. The bad news, from an actuarial basis, is that we are living longer. A lot longer. A growing number of people are and will spend more time in retirement, getting Social Security, than they did working and paying into it. Again, do the math!

People who get Social Security — or hope too someday — got some good news recently. Sort of. The good news is that Social Security will not run out of cash reserves until 2034. Some earlier estimates said it would go broke sooner. So where is it going?

Optimists predict Congress will fix it. Maybe make millionaires pay Social Security taxes on all of their income. Maybe raise them for everybody. Others, including many young people, say it’s too late, or soon will be. That there won’t be anything for them 99 years after the program began. For an update on the fate of your Social Security, we invited Tammy Flanagan to be on today’s Your Turn radio show. This is one you can’t afford to miss. Listen live at 10 a.m. EDT on federalnewsnetwork.com or 1500 AM in the Washington area. Or listen to it later by clicking on our home page. But please listen. If you have questions for Tammy shoot them to me before showtime at mcausey@federalnewsnetwork.com. In the meantime, here’s an overview, including possible changes to save Social Security, she prepared for today’s show:

Is Social Security really going broke?

The reserves of the larger trust fund (OASI), from which retirement benefits are paid, were nearly depleted in 1982. No beneficiary was short changed because the Congress enacted temporary emergency legislation that permitted borrowing from other Federal trust funds and then later enacted legislation to strengthen OASI Trust Fund financing. The borrowed amounts were repaid with interest within 4 years.

As Congress did in 1983, it is apparent that Congress will need to enact changes to Social Security in the near future to avoid the problems that are foreseen in the annual trustees report.

According to the 2022 Social Security Trustees report, lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.

By law, there are six trustees, four of whom serve by virtue of their positions in the federal government: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services and the Commissioner of Social Security. The other two trustees are public representatives appointed by the president, subject to confirmation by the Senate. The two public trustee positions have been vacant since 2015.

Part of the problem is that there are a lot of us who are eligible to receive, are becoming eligible to receive or are already receiving benefits. We’re called the baby-boom generation. There are 71.6 million boomers.

Using their own definition of baby boomers as people born between 1946 and 1964 and U.S. Census data, the Pew Research Center estimated 71.6 million boomers were in the United States as of 2019. According to Census Bureau projections, older adults are projected to outnumber children under age 18 for the first time in U.S. history by 2034. And we’re living longer, despite the many deaths that occurred as a result of the pandemic.

Many policy makers have developed proposals and options to address this long-range solvency problem, and we will talk about them today.

Nearly Useless Factoid

By Robert O’Shaughnessy

Source: Arizona State Library

Best listening experience is on Chrome, Firefox or Safari. Subscribe to Federal Drive’s daily audio interviews on Apple Podcasts or PodcastOne.

When Congress created the Federal Employee Retirement System in the ‘80s, one of the most notable changes was that future retirees would get smaller cost of living adjustments than participants in the old Civil Service Retirement System. CSRS and Social Security beneficiaries get COLAs that match inflation; FERS retirees get a smaller adjustment. That hasn’t been a big deal over the past decade of low inflation, but obviously circumstances have changed. The National Active and Retired Federal Employees Association (NARFE) is urging Congress to pass the Equal COLA Act, which would get rid of the disparity between CSRS and FERS COLAs. To talk more about it, the Federal Drive was joined by John Hatton, Vice President for Policy and Programs at NARFE.

Interview transcript:

Jared Serbu: John, I think the right place to start off here is remind us how FERS COLAs actually work right now under current law.

John Hatton: OK, well, there’s a couple issues first, you don’t get them until you’re age 62. And then unless you’re in a special category, that you can call, it doesn’t address that particular issue. The second is, when it’s, when inflation is above 2%, you’re not getting the full COLA. So if it’s a 2.5%, you get 2%. If it’s 4%, you get 3%. It’s whatever it is minus 1%. Except for him that two to three range is just 2%. A few too many numbers in there for you. But a good example is last year and 2020, CSRS and Social Security got a 5.9% COLA, FERS got 4.9%. So it’s just a 1% reduction when inflation is high.

Jared Serbu: Right. Just out of curiosity, do you happen to know if there’s any particular policy rationale behind that one point reduction back when Congress first came up with it? Or was it just straight up deficit reduction?

John Hatton: Yeah, it was all part of a balance, you know, they tried to when they switched over to FERS and created FERS they tried to make it actuarially similar to CSRS. So if you take, you know, the first pension, and you add in Social Security, and you add in your TSP at a certain level, it was supposed to provide a similar payout overall, like in the aggregate to CSRS. So they had to tweak some numbers and move some numbers around. So I don’t think there’s a really good explanation for it other than they probably had to make the numbers work. So here’s a way to do that. We’re going to reduce that number down by 1%.

Jared Serbu: And what would the, what would the legislation we’re talking about here actually do?

John Hatton: It would just provide, it’s very simple, it would just provide, you know, the COLA, cost of living adjustment that’s based on the change in consumer prices, the exact way Social Security is provided, the exact way Civil Service Retirement System annuities are provided. So it’s just whatever that change in the consumer price index that the Bureau of Labor Statistics looks at from one year to the next is, that’s what the cost of living adjustment be, would be, and there would be no reduction.

Jared Serbu: And this legislation has been around before. This is not the first year it’s been introduced. What are you hearing, if anything from the Hill that would give you hope that this is the year?

John Hatton: You know, I think it’s an uphill battle. Obviously, inflation is higher now. So this is more of an issue that’s present. The other thing is that, you know, there’s a lot more FERS retirees, we’re coming up to close to, or more than a million FERS retirees based on the last statistical report that OPM put out. So we’re almost half and half of FERS and CSRS, so more people are affected by this. You know, this is the first time the Senate has introduced the bill, the Equal COLA Act has been around in the house, but they introduced it in the Senate. So we now have a bill in each chamber. And cosponsors keep on going up each Congress, but it is a little bit of an uphill fight for this Congress are in the short term. So we just need to keep on building support getting more people to contact their members of Congress about it, and then we might have some success, you know, getting it through.

Jared Serbu: Yeah. And besides inflation being a real thing this year, I mean, that that is a difference, right? I mean, I think the past decade or so the FERS and CSRS COLA increases were just about equal I think every year just because inflation wasn’t so much of a thing. But now it it does get you into a point where it does start to become a little bit of a fairness issue, right? Because it’s not just a one year hit. That’s, that increase is something you’ll never recover for the rest of your life, right?

John Hatton: Yeah, I mean one year have a lower cost of living adjustment probably isn’t going to do too much to you. But if you start getting two, three, four or five years in a row, you know, that compounds over time as well. And it really starts to add up over the course of a full retirement. It really does have more of an impact. I mean, obviously, it doesn’t come into play if inflation is lower, but when you get multiple years of high inflation, which, you know, we’re gonna see two years in a row and we might see a third. You know, it’s going to really depress the value of that annuity.

This marks a significant increase from the 70-day wait time in May 2021. While the fiscal year-to-date average processing time increased by 13 days since last year, it has remained unchanged since last month, averaging 87 days to receive benefits. 

The number of federal employees retiring decreased for the fifth consecutive month. Although OPM received 9,673 new claims in May, a 3% decrease from April, the agency processed almost 10% fewer – 10,266 – claims compared to April’s 11,393 processed claims. 

As for the retirement claims backlog, last month the inventory is the lowest it has been since January, with 32,346 claims waiting to be processed. This is still far above the 24,619 claims OPM had backlogged last May as employees are slowly returning to the office.

The Federal Retirement Thrift Investment Board plans to add even more staff as needed. That’s after a major update to TSP’s system on June 1 caused an influx of calls from participants experiencing difficulties accessing their account data.

Many participants who tried calling ThriftLine, TSP’s customer service office, said they were on hold for a long time, some for more than six hours. On Twitter, one participant shared a phone screenshot of a third call attempt, on the line for multiple hours.

Yesterday 3rd call https://t.co/igz9w8ssh6 pic.twitter.com/saON0xf9N9

— hd (@Hdmizeltotheizl) June 7, 2022

The board tweeted on June 9 that ThriftLine call volumes are “very high.” In response, FRTIB created a “current known issues” landing page to try to help participants resolve a few issues without calling customer service. Common issues include account holds and missing data on both beneficiaries and historical account information. More details about known issues are available when users log in to My Account, the board said.

Overall, 90% of participants who have tried to log in to their account have been successful, but FRTIB Director of External Affairs Kim Weaver said in an email to Federal News Network that right now, the board is focused on helping those who are struggling.

“While most participants are able to successfully navigate the system, our priority right now is resolving the issues and challenges for people having difficulty,” Weaver said. “We are committed to helping those people set up their accounts as soon as possible.”

As part of the June 1 update, the board transitioned to a new recordkeeping system, in charge of maintaining eligibility records, managing payroll data, processing transactions, issuing account statements, providing online access and offering responsive customer support to participants.

The system update requires a one-time setup process that all TSP users must complete.

Many participants reached out to Federal News Network to share concerns about the new system. Some said they cannot log in to their account. Others said once they logged in, there was missing information. Several participants, for example, said once they logged in to the new My Account, they couldn’t access financial information prior to June 1.

“The new login system has bugs, it does not recognize existing personal info, it freezes up all the time, it constantly changes required inputs and it does not allow access to existing accounts … All historical data is gone,” one participant wrote in an email to Federal News Network.

The recordkeeper transition requires moving a large amount of data and transferring account information for about 6.5 million TSP participants. Weaver said participants now have access to year-to-date employee contributions for 2022.

But some information is not yet available for participants to see in their accounts. The board is on track for its plan to make 10 years of prior year-ending account balances available online in mid-June.

“Historical statements, documents and other messages from the prior system have not been transferred to the new My Account. If participants need access to historical documents, they will need to request them by calling ThriftLine,” Weaver said (this website has contact information for TSP customer service).

Aside from historical data, some participants said their beneficiary information was inaccurate in the interface.

Weaver said “for a small number of participants,” the board didn’t transfer beneficiary information to the new system because it didn’t meet data quality standards. The board encourages all participants to review and confirm their beneficiary information.

Weaver said the missing data is only a perception on the user end – the board has all the correct information in store.

“Rest assured that we still have their previous beneficiary designations and they will be followed should it be necessary,” she said.

Some participants also said they are unable to get loans processed because of missing or inaccurate information. One participant who wants to take out a loan expressed frustrations about trying to get in touch with customer service.

“The TSP help line personnel have all been great, but the first line of help can’t do much, and can only transfer you to the loan department or their next line supervisor… we’ve had several dropped calls, which is demoralizing after hours on hold,” the TSP user wrote in an email to Federal News Network. “As it stands, the system thinks our accounts are new, so it says we can only borrow a little over half of what we’re actually allowed to borrow…we cannot get in touch with anyone in loan processing.”

Weaver said the board is aware that the issues are causing confusion and frustration. But on the back end, all data is accurate.

“Our financial and loan conversions balanced to the penny,” Weaver said. “We are continuing to monitor potential issues and are working to address them as rapidly as possible. We will be publishing additional information regarding known issues to tsp.gov and in My Account.”

For some users, certain internet browsers seem to work better than others to load the website. Participants shared online that Microsoft Edge seems to be the best browser to use, while Google Chrome and Safari don’t work as well.

“This seems to be an intermittent issue and one we have not been able to replicate at-scale in our environment. While we are continuing to troubleshoot, we’ve been advising participants to try a different browser. Our team is investigating what may be causing this issue,” Weaver said.

The goal of the new My Account interface and recordkeeper transition is to ensure the safety of participants’ investments by adding more layers of security, as well as anti-fraud protections. But Weaver said the board understands that the changes have caused challenges for some participants trying to set up accounts.

“We understand our participants’ frustration and apologize for the inconvenience. We’re working to address issues as rapidly as possible, and we appreciate their patience,” she said.

In the meantime, the board is continuing normal processes, enrollments and transactions.

“Our financial management systems are up and running. Contributions are being processed. Loans, withdrawals and mutual fund window enrollments are happening. TSP savings remain invested in the funds participants have chosen. More than 1,100 participants have rolled money into the TSP. More than 12,000 withdrawals requests have been received,” Weaver said.

Some Thrift Savings Plan participants are experiencing major service delays when trying to access their retirement accounts.

The new version of My Account, launched on June 1, requires all participants to set up a new login. As a result, the Federal Retirement Thrift Investment Board, the agency in charge of the TSP, received an influx of customer service calls over the past several days.

After the board rolled out a mobile app and a new online interface, several readers reached out to Federal News Network to share their firsthand experiences and express frustrations.

“No one has account access. No phones are or emails answered. FRTIB no longer responds,” one participant wrote in an email.

“I have been unsuccessful at logging into my account for the past five days. Using the TSP website and their login instructions I have attempted to set up my new TSP credentials at least seven times,” another participant wrote to Federal News Network. “On two separate days I attempted to contact TSP on their customer service phone number … I was on hold for six hours.”

The board acknowledged the delays, saying a higher volume of participants calling was expected.

“We have seen record-breaking call volumes, leading to increased hold times. We received more than 120,000 phone calls on June 1 – two-point-five times more than our previous high call volume,” FRTIB Director of External Affairs Kim Weaver wrote in an email to Federal News Network.

The board is “urgently working” to address the delays, Weaver said.

“We are very sorry for frustration and delay some participants are experiencing,” Weaver wrote.

Take our survey on your experience with the update here.

Many TSP participants also posted on a Reddit forum to share their frustrations with the new My Account system.

“For those of you that can’t create your new TSP account name, do not bother trying to call for help. I was on hold for four and a half hours only to be told it is a known issue they are working on and to try again,” one user wrote.

Many users also said that the internet browser that participants use may affect their ability to log in. Currently, the best one to use is Microsoft Edge, according to many Reddit users.

Weaver said the board is aware of the internet browser issues and is working to address them.

In response to the service issues, some said the board shouldn’t have updated the system at all.

“We got rid of a system that worked and replaced it with a new one that doesn’t work as well. And when it does work, it provides a fraction of what the old one offered,” one Reddit user wrote.

But Weaver said the new login is necessary because the board’s highest priority is protecting participants’ retirement savings.

“We designed this process with security and anti-fraud measures in mind,” she wrote.

Weaver said to access the new My Account, participants must complete the required one-time setup process either through an online enrollment process or a one-time passcode sent to them through the mail.

As of June 5, roughly 86% of participants who have attempted to set up their new login have completed online identity verification for immediate access to their online account. Additionally, about 3% of participants have had a one-time passcode mailed to them, Weaver said.

Weaver added that there is help available for participants who are having difficulties. ThriftLine participant services representatives can help users request a one-time mailed passcode or guide them through the online account setup process.

Despite the issues and delays, Weaver said core functionality of the system is working well.

“We are processing payroll contributions and running all daily processes, including loans, withdrawals, fund reallocations, beneficiary designations and mutual fund window enrollments,” Weaver wrote.

For decades, many whose Social Security benefits have been reduced by WEP or Offset have been pushing Congress to fix them. Backers of WEP and Offset say they prevent former feds under the CSRS retirement plan, and state and local government employees whose jobs were not covered by Social Security for most or all of their careers, from collecting higher benefits based on relatively short employment in a Social Security job. Backers of the laws say they prevent people from using what they call a “welfare tilt” in Social Security toward people with lower lifetime earnings, protecting the program from being ripped off by preventing “excessive” payments to government retirees/survivors who spent the minimal time paying into Social Security. Opponents say it was a cruel way to save money by denying some or all benefits to people who need it most, and that the former government people are the ones being ripped off when their benefits are reduced or simply wiped out.

The two laws, the Windfall Elimination Provision and Government Pension Offset, were enacted as reforms. And they are incredibly complex, even by Washington standards. And controversial. Most people have never heard of them. But those who know why they exist and what they do are deadly serious.

Russia and Ukraine are likely to co-host a World Fair before the pro vs. anti WEP and GPO forces agree to coexist. Meanwhile, one side is seeking repeal while the other fights to keep them in place. This year is slightly different, maybe. Backers of repeal — led by the National Active and Retired Federal Employees — are within 14 votes of forcing the House to take up the issue. If they get the full number, there is no guarantee the House will pass it, or that the Senate will act. But they are closer than ever.

John Hatton, staff vice president for policy and programs at NARFE said “While NARFE and organizations representing state and local retirees have built significant support for repeal of WEP and GPO over the years, securing floor voters in either chamber of Congress has remained out of reach, perhaps due to the likely costs of the repeal bills and projected solvency challenges for Social Security. But a recent rule change in the House of Representatives allows bills to bypass committee consideration if they receive 290 cosponsors. H.R. 82, the Social Security Fairness Act, which would repeal both WEP and GPO is up to 276 cosponsors, just 14 short of that mark. So we continue to push representatives to cosponsor the bill, and hope for some long-awaited progress on these issues.”

So where does your member of Congress stand on the issue? Is he or she on board or opposed to change? Or just not interested? Here’s a list of cosponsors to the WEP-GPO laws.

Nearly Useless Factoid

By Daisy Thornton

Equatorial Guinea does not touch the equator.

Source: Wikipedia

Compared to a year ago, all funds posted lower returns except the government securities investment G fund and the fixed income index investment F fund, according to monthly returns released by the TSP on Wednesday. The G fund, which had a return of 0.13% for May 2021, had a 0.21% return last month; while the F fund had a 0.34% return for May 2021 and a 1.13% return last month.

The G fund continued its streak of modest, yet consistent month-over-month growth that has been happening for at least 57 months, based on Federal News Network data.

The small cap stock index S fund had the lowest return, at -3.53% last month. Compared to April, it is up from -10.57%. The common stock index C fund rose from a -8.72% return in April, to a -1.65% return in May. Meanwhile, the fixed income index F fund is the only fund aside from the G fund that gained ground over the last year.

All Lifecycle funds finished in the red last month except for the L Income fund, which had a return of 0.04%. The biggest monthly gains were in the L 2055, L 2060 and L 2065 funds, which rose from  -8.11% in April to -0.89% last month.

Year over year, all Lifecycle funds were down in May.

Differences between fund and index returns were larger than normal last month because the TSP transitioned its record keeper, said Kim Weaver, the director of external affairs for the Federal Retirement Thrift Investment Board. As a consequence of the switch, participants were unable to make trades on May 27 and May 31. The returns presented reflect the market returns through May 26. Benchmark indices captured the entire month, however.

A million dollar nest egg may be a reasonable goal at age 25. But that could change by the time you are 50 or 60. Maybe been through a major recession or two. Or seen inflation skyrocket. Like, well, now. Nobody is getting any younger.  But the world and the economy — from gasoline and infant formula to the threat of an expanding war in Europe — are changing daily. So far, in many cases, not for the better. So we asked a recently retired fed, Abraham Grungold, for his thoughts. He recently left government after a long-career and long-time TSP investor who became a millionaire plus by careful and steady investing. Here’s what he said:

TSP — How much is enough?

There are approximately four million federal employees in the Thrift Savings Plan (TSP) and there are over 100k TSP millionaires. So how much TSP savings are enough for a successful retirement? What is the amount needed for someone to retire comfortably? It depends on many factors which are different for every individual’s personal and financial needs. The figures in the following two scenarios are estimates and federal and state taxes may vary.

Single Person

After 30 years of federal service and at age 62 years of age you have a 30,000 annuity, a 20,000 SSA benefit, and you have 500,000 in your TSP withdrawing 4% for the next 25 years which is 20,000 per year. Your total is 70,000 per year and after taxes it comes to approximately 55,000 per year. Will this level of income satisfy his/her lifestyle?

Married Couple

Let’s apply the scenario to a married couple both are at age 62 with one spouse being a federal employee. And they have $1 million in their TSP and combined retirement savings.

Spouse #1 has a $30,000 annuity, $20,000 SSA and spouse #2 has a $20,000 SSA. They are withdrawing 4% of their $1,000,000 over 25 years which is $40,000 per year. Their total is $110,000 per year and after taxes it comes to approximately $85,000 per year. Will this level of income satisfy your lifestyle?

Prior to retirement, it is very important for federal employees to maximize their contributions and invest aggressively in order to achieve the level of retirement income that they desire as well as to consider a plan for the unforeseen life events. I have heard from several federal employees that $2 million is enough for them in retirement. But, is it really enough?

Life can throw you some curve balls.  Here are a few of unplanned events that can pop up in retirement:

1. Inflation and the rising cost of everything.
2. Mortgage for a second home/vacation home.
3. Medical and pharmaceutical needs.
4. Grandchildren’s college education.
5. Long term care/nursing home.

In retirement, you need to take a conservative approach and to monitor your expenses very closely.  TSP investors still need to invest somewhat aggressively in order to plan for these unforeseen events and to continue building their TSP even though they are making withdrawals.

As a financial coach, many federal employees contact me regarding their retirement, their TSP and their assets outside of the TSP.  I suggest that they need to have a contingency plan in retirement to address any possible situations.  Saving as much as possible in your TSP is the solution to these senior life events.

Nearly Useless Factoid

By Robert O’Shaughnessy

It takes 90 days for a drop of water to travel the entire length of the Mississippi River.

Source: National Wildlife Federation

It’s hard to think about next summer’s vacation at the beach in February when there is a blizzard outside and your roof is groaning under the weight of all that ice and snow. There are times when it is important to live in the moment and focus on how to minimize your losses. But that is not always the best plan for ordinary people who are investing for a retirement that could last 10, 20 or 30-plus years. Like now!

After decades of mostly good — often great — news, the stock market is wobbling. For good reason. Thrift Savings Plan investors have grown accustomed to big returns with hiccups replacing bear markets. Generally speaking, things have been good-to-excellent since May 2009, the end of the Great Recession. The TSP is critical to federal/postal workers under the FERS program. It could provide anywhere from one-third to one-half of their total income-for-life in retirement. Their federal retirement annuity and Social Security are the other parts of that three-legged system Congress designed in the 1980s. The changes, while excellent in many respects, mean that FERS employees must work harder/plan smarter and show more discipline in order to match what they would have gotten under the CSRS program. They need to invest smarter and harder (as in more) to match or exceed what they would have gotten under CSRS. But it can be done. Most of the current TSP millionaires are FERS employees/retirees who maxed out on their contributions (ensuring the 5% government match) and who continued to invest in the stock indexed C, S and I funds during the Great Recession when the market tanked, producing a scary buyer’s market for investors.

It’s easy to talk about long-haul, no-panic investing during good times, like we’ve just experienced for an unnaturally long time. But when the going gets tough, and markets decline — sometimes rapidly — it is harder to stay the course and sleep at night.

Now we’ve got Russia in Ukraine, China and the Taiwan problem, a seriously divided nation here at home, big-time inflation and record high gasoline prices. Oh, and a continuing pandemic that has altered the world and killed at least one million Americans. And a critical shortage of life-or-death infant formula. What next, monkeypox?

So what if this period, right now, turns out to be the good old days?! What if things get much worse before they get a little better? So who did we call for advice? How about Arthur Stein, a well-known Washington-area financial planner. Most of his clients are active or retired feds. Several are TSP millionaires, in some cases because-not-in-spite-of the Great Recession. He’ll be my guest today on our Your Turn radio show (10 a.m. EDT) on federanewsnetwork.com or 1500 AM in the Washington-Baltimore area. If you have questions for him, send them to me before showtime at mcausey@federalnewsnetwork.com/alert. Meantime he’s written an introductory column of his own explaining what we’ll be looking at and talking about today.

Longer return periods make everything look better

Through May 20, 2022, returns for 14 of the 15 TSP funds were down. Down a lot.

So where can you find some good news? It’s easy, just look a little further back and, like magic, all those negative returns disappear.

And you don’t have to look back too far. Just three years.

The stock funds (C, S and I) all performed well over the last three years, even with the recent declines. Well enough to produce average annual rates of return that were much higher than the bond funds (G and F). And the horrible F fund declines, probably the worst ever, disappeared.

This should be a reminder to TSP participants that allocation decisions need to consider when funds will need to be withdrawn to supplement annuities and Social Security. For instance:

• The G fund is an excellent choice for funds that will be withdrawn in the next 1-5 years.
• F is a good choice for funds that will be needed in the next three to ten years.
• The stock funds make sense for funds that won’t be needed for ten years or more.

The L funds work differently. They began with 80% to 99% invested in stocks (C, S and I) and the remainder in bonds (F and G). Over time, the percentages in stocks decline as the percentages in bonds increases. When they reach their target dates, L funds close and investments transfer to the L Income fund, which is currently 75% bonds, mostly G.

That doesn’t protect from losses. Current returns are negative for all L funds, including L Income.

Nearly Useless Factoid

By David Thornton

There are only about 25 blimps still in existence.

Source: Reader’s Digest