Rethinking My 401(K) Strategy

Source: Labornotes.org

Source: Labornotes.org

Don’t you just love blog posts with snappy titles such as the one above?  Nothing, I repeat nothing, gets hormones raging and testosterone pumping than retirement finances.  It’s enough to send you… well, for a really long nap.  May I offer you a pillow and some chamomile tea?  Some more Mantovani perhaps?

Gorgeous insists that no matter what my topic is, I need to tag every published post with the words sex, infidelity, cats, booze, and chocolate to nail the big readership statistics. She says I need to “sex it up” a bit.

Perhaps.  But I just can’t fathom stooping to such lengths for a mere bump in blog popularity.

Your humble blogger.  Just another day lounging at home...

Your humble blogger’s backside. Sex and money sell, Baby.

But as the tired old line goes, “now that I have your attention…”  I do have news.  In spite of my oft-digression to the mundanities of life, this blog still purports to be focused on the topic of early retirement.  To the six faithful readers who for some reason follow without fail, I promise that imbecility will return in full flower with the very next posting.

The big news is that I am absolutely filthy, stinking rich!  Sort of anyway.  We all judge affluence through different sets of standards, of course.  So you’ll just have to accept that by my own standards, I am well-heeled and loaded.  In fact, I actually have been rich since the day I retired.  But because of recent circumstances, specifically my short attention span, I only now just re-discovered this wonderful fact.

I am revealing said affluentness in the same manner that Donald Trump regularly shares the details of his own substantial fortune: by simply declaring myself to be rich.  The difference is that while I am merely mentioning it in passing, The Donald is far more gauche because he actually goes into detail about the size of his massive wealth.  I will therefore not disclose the size of mine. This comes from a lifetime of conditioning myself to avoid comparisons to other men.  Self-preservation has taught me to just acknowledge that the other fella is always manifestly bigger.  Changing the conversation to a more civilized and polite discourse is usually a better idea.

So today, I wish to tell you about my bulging 401(k) balance.

Since retiring, most of my efforts have gone towards sparring with my former employer over the dollar amount of my annuity.  My nemesis, the United States Office of Personnel Management (OPM), has managed to confound both me and my former H.R. officer, the ever diligent “Blue Eyes.”  For reasons only known to them, OPM has never fully explained the incomprehensible calculation that allegedly explains the amount of money that my ex-wife is receiving from my pension.  They recently responded to a second follow-up query I made, but their answer left us even more confused than before.  For now I’ve decided that it’s best to simply let the matter rest.  I do lay out the possibility of filing an appeal with OPM’s new Beijing branch office at a later date.

Source: http://www.nndb.com/people/440/000022374/

Louis Rukeyser. Source: nndb.com

Because of this months-long distraction, I nearly forgot about a second limb of the allegedly erstwhile three-legged stool of retirement: my 401(k).  A recent statement I received shows that its value rose sharply in the year since I retired.  While I am still nowhere near Mr. Trump’s estimated and self-expressed worth, I do have an amount that I know would have greatly impressed my father.  Dad used to watch Louis Rukeyser’s “Wall Street Week” on public television each Friday night without fail.  Sadly though, he was never able to apply very much of what he learned to his own life.  When he became too old to manage his finances any longer, I remember being shocked at how the man who could suavely parrot economic news from TV and newspaper reports, was himself a bit of a monetary disaster. It thus became a bell-ringing moment for me that I needed get serious about my own savings.

In spite of being married at the time to a woman whose fidelity to the American economy was so strong that she made sure to stimulate it at every opportunity, I still managed to sock away as much as I could with every pay period.  The federal government’s 401(k)-style program for employees is called the Thrift Savings Plan (TSP).   In good years and bad, I made sure to contribute no less than 10% of my pay, often more.  I was also fortunate to receive an employer match on the first 5% of what I contributed at each pay period.  No matter what kind of financial calamity that took place in my real-life world (home repairs, parental assisted living care costs, hurricane damage to Florida investment condos, etc.), I faithfully contributed to the TSP for all pay periods without thinking twice about it.

As my marriage began to crumble under the weight of my ex-wife’s gambling addiction, we found ourselves liquidating nearly everything that we owned in order to retire debts. Individual stocks of blue chip companies that I had originally purchased primarily for investment education needed to be sold to pay the divorce lawyers.  By the time our divorce was final, I was for the most part left only with the 401(k) as my sole source of savings.  As sad and devastating as a marriage ending is for everyone involved, I felt luckier than most that I was at least coming out of it with some financial viability.  Or as I asked Gorgeous a few years later in a less polished way, “So, like, I’m still a catch, yeah?” 

I took advantage of early retirement one year before my official date of eligibility.  Although working just a few years more would have made more sense, I knew that between my annuity, what I would eventually get from Social Security, and the amount Gorgeous makes from her clients, that we would be fine so long as we moved to an area with a lower cost of living.  We have done this.

The 401(k) funds sit untouched. They hopefully will survive occasional fits of market volatility and will grow enough for when we start to draw from them in later years– when the hair is grayer and the wrinkles become more pronounced than they are at present.

My hope is to not begin making any withdrawals from these funds until age 65 at the very earliest.  But as we all know, life can throw curve balls when we least expect it with health issues, environmental factors, and financial challenges.  So while my plan is to safeguard the nest egg at all costs, I do acknowledge that sometimes even the best laid plans need to be altered.  In any event, retirement funds are not allowed to be withdrawn without penalty until age 59 1/2, and I have a small handful of years yet for when I reach that age.

I had always planned on keeping these 401(k) funds in my former employer’s plan forever (there are no requirements to remove it after retirement).  But in addition to the recent hacks on federal government computers, other disturbing events have also taken place which impact federal retirees.  This time the perpetrators are not our Chinese adversaries but rather our own United States Congress.  Congress it seems can’t seem to keep its hands off the TSP funds (see here and here).¹  As a result, I am now strongly considering rolling over my funds out and into a private IRA with one of the major mutual fund companies. Because of the generally low fees associated with index funds, I believe I can match the low-cost management of the TSP and not have to worry about whether a member of Congress has a new idea by “borrowing” from my own personal piggy bank.

I will make my decision probably by the end of August.  If you see me leaving a broker’s office with my silk blazer and an ascot around my neck, you’ll know the deed has been done. In the meantime, please stop gawking at both my money and my tushy.  It’s not polite to stare.

What have you done with your retirement funds?  Please share.  Your story, I mean.  Not your money!

¹  Correction:  After publishing this post, it was pointed out to me by an alert reader that the Washington Post article of March 13, 2015 specifies that it is a Treasury Department action to raid the TSP G Fund for debt ceiling relief and not Congress.  I stand corrected and am grateful for the notification.  

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17 thoughts on “Rethinking My 401(K) Strategy

  1. I used to manage my money myself but after the tech debacle, I went with a well known money company which I hated. As head of HR (but without blue eyes) I oversaw our 401(k) and was familiar with money management. I found a local group that manages money and I like them a lot. They charge less than the other company who had a lot of “hidden costs” and used costly funds. My current manager uses funds without front end charges (the other did not) and they have done well for me over the past 4 years. I only wish I would have found them 20 years ago. Good luck with your wealth and tushy.

    Liked by 1 person

  2. If your wife rolled her eyes when you asked her to take the picture of your calves a few weeks ago, I can just imagine the eye cramps she must have gotten when you asked her to take this one! But, I guess it really is her fault for suggesting sex, infidelity, cats, booze, and chocolate as the best topics to gain readership.

    I agree, get your retirement savings out of those (mis) mananged accounts and get them into indexed funds. The market is bound to change one of these days, but it’s been a good one for awhile.

    Liked by 2 people

    • So true, Janis! I think she realizes she’s complicit with this one, though there is still that resigned “sigh” each time I approach with my camera. That unspoken, “Oh, dear God, what now?” refrain comes through on my radar with absolutely no static at all!

      Sadly, the thing about the TSP is that though the fund choices are limited, they actually do mimic the same indices they are designed to emulate quite well. The problem is that politics can disrupt their success. So, yes, I do think it’s probably time to move my money out. I’ll be buying a case of Maalox to have on hand for when I do!

      Liked by 1 person

    • I agree, Tony! After I finished this post, I actually went on YouTube and watched portions of some of his old programs, particularly the one right after the great crash in 1987. His reassurance was probably most helpful at the end of that week. He was funny and never prone to panic — compare him now to Jim Cramer!

      Like

  3. Getting straight answers from large government agencies can be such a headache when the answer lies layers deep in documents that no one has looked at in ages. I won’t be surprised if your inquiries are simply stamped as received and nothing else is done beca use the person sitting at that desk is also marking time to their own retirement. I’m sure if it were someone new and eager to impress the bosses you would have had a proper answer months ago.

    At this point sending a sexy pic would probably get you further!

    Being self employed for 18yrs saving for retirement has always been tough when most of my income gets reinvested into my business. Then factor in 2 major financial setbacks and I’m left playing catchup. I finally started an IRA this year and hope to start dumping funds into it rapidly via my tax refunds in upcoming years. Instead of major spending sprees I’ll just dump it into the IRA and pray that no other major upsets befall my finances.

    Good luck with your decisions. Hope it all works out!

    Liked by 1 person

    • I even tried to be sneaky and wrote the office a letter attaching the e-mail from the unhelpful woman who had been helping me. All they did was send me right back to her again!!!! I suspect you’re right — she’s probably got one foot out the door.

      Yes, it’s good to “pay yourself first” as the old adage goes. Try to come up with an amount that you feel you contribute to an IRA… and then for good measure toss in a little more till it *just* slightly hurts to do so. You’ll be glad you did in later years!

      Liked by 1 person

      • I had a similar experience with a college Advisor. Initially she was super helpful, but right before she transferred out to another job students assigned to her we all noticing a shift in the way she did things. It came as no surprise when we got notice she was leaving. She simply stopped caring…

        Like

      • OPM is probably the most under-funded agency in the federal government — probably more so than the Postal Service. Bashing civil servants makes for great headlines and political theater, and so therefore any attempt to help by adding more resources (i.e. in OPM’s case it needs additional staff). One of the reasons why the Chinese were able to hack into their computers so easily is that the federal government cannot compete with private companies for skilled IT engineers. While it’s great politics for members of Congress to condemn management, shoddy work practices, lazy workers, etc., it’s much harder to admit to your constituents that you are going to support additional resources to help this agency or any other. So morale stays low.

        And on that cheery note, thanks for reading!

        Liked by 1 person

  4. Pingback: Down! | Snakes in the Grass

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