Officials Urge Savings Plan Members to Stay Calm
By Gerry J. Gilmore
American Forces Press Service
WASHINGTON, Oct. 29, 2008 – 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 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.”
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