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By Gerry J. Gilmore
American Forces Press Service
WASHINGTON - Defense Department civilians and military members who participate in the Thrift Savings Plan should try to stay calm after recent stock market gyrations have reduced many retirement account balances, senior officials said.
"The last few weeks have been difficult times for all of us," Gregory T. Long, executive director of the Federal Retirement Thrift Investment Board,wrote in an Oct. 7, 2008 letter addressed to TSP participants.
Long also is the chief executive officer and manager of the TSP that serves federal civilians and military members. The TSP is similar to 401(k) retirement plans used by private-sector enterprises.
Amid the global economic crisis, the TSP's stock-market-invested C, S, and I Funds "have experienced sharp declines," Long acknowledged in the letter. However, TSP participants should view the present situation "as a time for prudence, not panic," he wrote.
Many participants, both those nearing retirement and people with years to serve until retirement, have transferred their TSP assets from C, S and I Funds into the more-stable G Fund, which is backed by the U.S. government, said Tom Trabucco, director of external affairs for the Thrift Investment Board, which oversees TSP.
Echoing Long's belief that TSP participants should not panic, Trabucco said people shouldn't constantly switch their TSP funds back and forth according to stock market conditions.
"It's unfortunate, because what happens is, as people are running away from the stock funds, they are missing the potential for when those stock funds snap back, as they did yesterday with a 10-percent return," Trabucco said, referring to the Dow Jones' recent near 900-point rally.
A much-better course is to develop a balanced, long-range retirement investment plan, Trabucco said, instead of routinely switching TSP monies between various funds.
"If you don't think that you're capable of putting together a long-term investment plan, you are exactly the type of person who we had in mind when we created what we call our 'L' Funds, or life-cycle funds," Trabucco said. The L Funds represent a good choice for both younger and older employees, he said, because they use risk strategies that are weighted according to the participant's age and proximity to retirement.
Trabucco acknowledged that the stock market has been very volatile, "with very big swings" over the past two months. However, regardless of economic conditions, it is imperative that TSP participants develop long-term retirement-savings investment plans, he said.
"You just can't get overwhelmed with these short-term ups and downs" in the stock market, Trabucco said. "If you have a long-term plan, stick with your long-term plan. If you don't have a long-term plan, maybe it's time to start thinking about putting one together."
| Date Taken: | 10.29.2008 |
| Date Posted: | 10.29.2008 17:18 |
| Story ID: | 25709 |
| Location: | WASHINGTON, DC, US |
| Web Views: | 195 |
| Downloads: | 180 |
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