Over the past few weeks, the news has been dominated by reports of economic decline. Even if American exports are up due to a weak U.S. dollar, it seems that the media and the American people are anticipating the worst: everywhere you turn there is fear - bank failures, an overheated housing market, high inflation and the list goes on. That news is enough to scare any recent graduate or employment seeker. However, for those of you contemplating public service, the time could never be better! There are three reasons why: job security, advancement opportunities and career development.
Government recruiters always tend to focus on the job security component. And given the uncertainty in today’s economy, its one of the best reasons to consider joining the federal workforce. Though most agencies require a probationary period or initial contract, once you’ve proven that you’re a productive member of your team and agency, you have a level of job assurance unmatched in the private sector. Not to say that it’s impossible to lose your job, as RIFs and voluntary early outs are always possible, but the dreaded pink slip generally does not rear its ugly head in the federal workforce.
Career advancement is the second reason for considering a public service career. Annual retirement rates likely surpass the annual rate of inflation! So have no fear, it’s a great time to join the federal workforce. In my organization, the U.S. Postal Service, and across the federal government, baby boomers in management positions are throwing in the towel faster than their critical positions can be filled. That means that management and leadership opportunities for Generation X and Y employees are more plentiful than at anytime EVER.
Finally, federal service offers developmental opportunities unmatched by the private sector. Of course, these depend greatly on the agency, but in an effort to recruit and retain the best and brightest, agencies are instituting tuition reimbursement programs, job rotations, and host of training programs for new employees to match up their talents with skills sets in great demand.
So to those of you considering federal service – now is the time! The private sector may be facing a host of challenges, but the public sector offers security, opportunity for advancement and developmental opportunities currently unrivaled by private employers.
Bruce Marsh
Chairman, YGL Strategic Planning
Wednesday, July 16, 2008
Sunday, July 6, 2008
Take Charge of Your Financial Future!
Numerous studies have found a majority of Americans are not prepared for retirement and face the prospect of having to work longer than they expect. Younger workers today also face a much longer life expectancy. One out of four 65 year olds today can expect to live into their 90s.
Until about two years ago, I was like the majority of Americans; I had given little thought to my retirement investments and could think of a million better things to do with my Sunday afternoons than figure out how I would support myself in my old age. But as the big 3-0 loomed closer and closer, retirement started to seem like something I needed to think about now rather than the far distant future. To educate myself, I signed up for a course in financial management through Arlington County and started to dig around the National Finance’s Center’s Employee Personnel Page and the TSP website. Embarrassingly, at the time, I had no idea how much I was contributing (somewhere around 10 or 11 %?) or to which fund I was contributing. I found out that I was contributing the maximum percent allowable (15%) in the G fund. Bonus points for contributing the maximum percent allowable. Negative points for contributing to the G fund in my 20s.
For those of you that have no idea why contributing to the G fund in your 20s is not the best idea, this blog is for you. Below are some basics that will start you on your path to financial security.
What is the TSP?
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees. These funds are for your retirement and you cannot withdraw them without penalty until you leave Federal service. You pay no taxes on TSP contributions or earnings until you withdraw your account. TSP is voluntary. You don’t have to contribute anything. There are limits to the amount you can contribute to TSP, however. The federal government matches contributions to TSP from one to five percent, depending on the amount you contribute to TSP.
TSP is only one aspect of your retirement savings…depending on whether you fall under FERS or CSRS, you also receive set benefits, including (1) a FERS or CSRS annuity based on your years of service and your salary and (2) Social Security (who knows if it will be around when you decide to retire). Both of these benefits are made on your behalf by your agency and are mandatory.
What’s so bad about the G fund?
The G fund is GREAT…if you are only a couple of years away from retiring. If you are like me, however, and just beginning your federal career, putting all your $$ into the G fund just doesn’t make much sense because of its low return on investment. The most difficult aspect of investing is figuring out your risk profile (and your tolerance for risk) and how that relates to your age.
The TSP offers all participants a choice of six investment funds:
1. Government Securities Investment (G) Fund - invested in short-term, risk-free government securities. (In other words, the really safe fund. Of note, this is also the default fund. If you do not remember selecting a fund, as I did, this is most likely the fund to which you are contributing.)
2. Fixed Income Index Investment (F) Fund - invested in fixed income securities from the Lehman Aggregate Bond Index. (Reliable fund, with minimal risk of investment loss, but is not a big earner.)
3. Common Stock Index Investment (C) Fund - invested in Standard & Poor’s 500 index, which includes some of the largest companies in the country, such as Coca-Cola, Ford, and McDonald’s. (Riskier than the G or F fund, but still a good long-term growth fund.)
4. Small Capitalization Stock Index Investment (S) Fund- invested in small and mid-sized companies from the Wilshire 4500 Index. (Another good long-term growth fund; tends to be more volatile and aggressive than the G, F, or C funds.)
5. International Stock Index Investment (I) Fund- invested in international stocks indexed from Morgan Stanley's Europe, Australasia, Far East, or EAFE, Index of large-company foreign stocks. (Again, good long-term growth fund; tends to be more volatile and aggressive than the G, F, or C funds.)
6. Lifecycle (L) Funds- These funds balance your contributions among the five funds based on your projected retirement date. Thus, those closer to retirement would chose the 2010 mix, which would put a higher percentage of contributions in the safer, more reliable G fund. Those further away from retirement such as me would invest in the 2030 or 2040 model, which has a larger percentage of funds in higher yielding, but more volatile options.
Your Next Steps
1. Go to http://www.tsp.gov/account/index.html to learn more about your TSP account.
2. Attend YGL’s upcoming event: Success with your Money with Janet Bodnar, Kiplinger Personal Finance Magazine on July 30, 2008 from 11:30 to 12:30 pm. For more details, check out our event calendar!
3. Take control of your financial future!
Kate Walker, President
Young Government Leaders
Until about two years ago, I was like the majority of Americans; I had given little thought to my retirement investments and could think of a million better things to do with my Sunday afternoons than figure out how I would support myself in my old age. But as the big 3-0 loomed closer and closer, retirement started to seem like something I needed to think about now rather than the far distant future. To educate myself, I signed up for a course in financial management through Arlington County and started to dig around the National Finance’s Center’s Employee Personnel Page and the TSP website. Embarrassingly, at the time, I had no idea how much I was contributing (somewhere around 10 or 11 %?) or to which fund I was contributing. I found out that I was contributing the maximum percent allowable (15%) in the G fund. Bonus points for contributing the maximum percent allowable. Negative points for contributing to the G fund in my 20s.
For those of you that have no idea why contributing to the G fund in your 20s is not the best idea, this blog is for you. Below are some basics that will start you on your path to financial security.
What is the TSP?
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees. These funds are for your retirement and you cannot withdraw them without penalty until you leave Federal service. You pay no taxes on TSP contributions or earnings until you withdraw your account. TSP is voluntary. You don’t have to contribute anything. There are limits to the amount you can contribute to TSP, however. The federal government matches contributions to TSP from one to five percent, depending on the amount you contribute to TSP.
TSP is only one aspect of your retirement savings…depending on whether you fall under FERS or CSRS, you also receive set benefits, including (1) a FERS or CSRS annuity based on your years of service and your salary and (2) Social Security (who knows if it will be around when you decide to retire). Both of these benefits are made on your behalf by your agency and are mandatory.
What’s so bad about the G fund?
The G fund is GREAT…if you are only a couple of years away from retiring. If you are like me, however, and just beginning your federal career, putting all your $$ into the G fund just doesn’t make much sense because of its low return on investment. The most difficult aspect of investing is figuring out your risk profile (and your tolerance for risk) and how that relates to your age.
The TSP offers all participants a choice of six investment funds:
1. Government Securities Investment (G) Fund - invested in short-term, risk-free government securities. (In other words, the really safe fund. Of note, this is also the default fund. If you do not remember selecting a fund, as I did, this is most likely the fund to which you are contributing.)
2. Fixed Income Index Investment (F) Fund - invested in fixed income securities from the Lehman Aggregate Bond Index. (Reliable fund, with minimal risk of investment loss, but is not a big earner.)
3. Common Stock Index Investment (C) Fund - invested in Standard & Poor’s 500 index, which includes some of the largest companies in the country, such as Coca-Cola, Ford, and McDonald’s. (Riskier than the G or F fund, but still a good long-term growth fund.)
4. Small Capitalization Stock Index Investment (S) Fund- invested in small and mid-sized companies from the Wilshire 4500 Index. (Another good long-term growth fund; tends to be more volatile and aggressive than the G, F, or C funds.)
5. International Stock Index Investment (I) Fund- invested in international stocks indexed from Morgan Stanley's Europe, Australasia, Far East, or EAFE, Index of large-company foreign stocks. (Again, good long-term growth fund; tends to be more volatile and aggressive than the G, F, or C funds.)
6. Lifecycle (L) Funds- These funds balance your contributions among the five funds based on your projected retirement date. Thus, those closer to retirement would chose the 2010 mix, which would put a higher percentage of contributions in the safer, more reliable G fund. Those further away from retirement such as me would invest in the 2030 or 2040 model, which has a larger percentage of funds in higher yielding, but more volatile options.
Your Next Steps
1. Go to http://www.tsp.gov/account/index.html to learn more about your TSP account.
2. Attend YGL’s upcoming event: Success with your Money with Janet Bodnar, Kiplinger Personal Finance Magazine on July 30, 2008 from 11:30 to 12:30 pm. For more details, check out our event calendar!
3. Take control of your financial future!
Kate Walker, President
Young Government Leaders
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