Women and Investments

Presented by:Tammy Flanagan

Tammy@nitpinc.com

Understanding the Thrift Savings Plan’s Role in Your Retirement

Resources for YOU

www.narfe.org

Famous Wealthy Women

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/inside-the-world-of-walmart-billionaire-alice-walton-americas-richest-art-collector/

Jacqueline Mars

Granddaughter of Frank Mars$23.5 Billion

Alice Walton Daughter of Sam Walton$35.6 Billion

Christy WaltonDaughter-In-Law of Sam

Walton$39.2 Billion

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/boomer-health/articles/2011/11/17/more-americans-living-to-90-us-census-finds

Your Federal

Retirement

FERS Basic Retirement and FERS Supplement

Social Security

Thrift Savings Plan

30+ Years of Service: 30 %

or moreFull Career

(LEO): 34% or more

Low Wages: 50%+

Medium Wages: 35 –

40%High Wages: 25% or less

$200,000: $8,000 /year

$500,000: $20,000/year$1,000,000:

$40,000/year

Income Replacement

http://www.frtib.gov/pdf/survey/participant/TSP-Survey-Results-2013.pdf

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%

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?

Lifecycle Fund

SC F

G I

11%3%

42%18%

25%

Allocation of L 2050 Fund

G Fund F Fund C FundS Fund I Fund

As of July 2014

16% of TSP Invested in L Funds (May 2014)

74%

6%

12%

3%

5%

Allocation of L Income Fund

G Fund F Fund C FundS Fund I Fund

Lifecycle Quiz

• I should choose the fund closest to mya) Retirement Dateb) Date of deathc) Date I will begin to use the money

Lifecycle Quiz

• I should choose the fund closest to mya) Retirement Dateb) Date of deathc) 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 Incomeb) Choose one or two Lifecycle Funds that are

appropriate for my retirement goalsc) 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 Incomeb) Choose one or two Lifecycle Funds that are

appropriate for my retirement goalsc) Diversify between all 10 TSP investment options

Start Early and Don’t StopLearn 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 TS

P4gov• 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 PaymentsBalance: $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.

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.

http://www.washingtonpost.com/business/as-brokers-urge-ira-rollovers-ex-workers-ditch-their-low-fee-federal-retirement-plan/2014/08/14/53c68dd0-2239-11e4-958c-268a320a60ce_story.html

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?