Letters to the Editor

Let them manage by themselves

Following are a sample of the letters Federal Computer Week received regarding Milt Zall's Bureaucratus column, "Managing for retirement" [Federal Computer Week, May 22, 2000]:

Regarding your suggestion that the government should establish rules that limit how a retiree may use the government-contributed portion of his pension: I strongly disagree with you, at least for those employees already vested in a plan. You want to start a new plan with this rule, then try it and see how folks react.

I like the advice in most of your columns, when I have time to read them, but this last piece of advice reflects a strong liberal tilt. I believe that when the employee makes a contribution to retirement out of his pay, he views the government as having committed its contribution. Just because the money is paid out later should not give the government the right to decide at that time whether the employee can receive the government portion as he wishes.

Counseling the employee is fine, but leave the decision to him. It is his money.

Stanley Schellenbach

As far as retirees doing what they want with their money when they retire, I believe it's their money. If they squander it, tough.

On the other hand, I could support a law that says something along the lines that deferred contributions the government make can't be "squandered," and only the portion you invest is really yours to do with what you want.

I am not convinced that there are many who will waste their money when they retire. I might pay off the house. But for the most part, I plan to place it in some vehicle in which I could earn safely 5 percent or 6 percent and live off the earnings, largely leaving the capital alone.

Name withheld

Justice Department

I agree with your thinking. Retiring federal employees should not be "handed" their government contributions in lump sum. Those who squander it will probably ultimately receive public funds — my and your tax dollars.

Name withheld

Defense Information Systems Agency

I believe funds should be allocated for training in personal financial planning and budgeting. No federal agency should allow its employees to be uninformed and possibly underfunded as they reach the age of retirement.

As you are probably aware, training funds are usually the first to be trimmed when many projects fight for too few dollars. This is one project that is just as important as how well you do your job.

In your comment about taking back tax savings from people who misuse retirement funds, how do you define misuse? Who will administer this program? Please re-read paragraph one about too many projects fighting for too few dollars! This should not be one of them!

Name withheld

Railroad Retirement Board

Having read your column for at least a decade, I consider your proposal of mandatory annuities to be the worst ones that I have seen from you.

While I can understand the logic for stopping the lump sum withdrawal for the Civil Service Retirement System (CSRS) employees (because it is their sole retirement income source), this does not apply for the Federal Employees Retirement System (FERS). Here, employees have both Social Security and the FERS pension.

In my case, if I were to retire today, assuming I have my full 30 years, I would receive slightly more than half my current income from these two sources. Because of this cushion, there is no reason to put a restriction on the Thrift Savings Plan portion.

In my case, if I choose to retire at the earliest possible age where I can get a full pension, I would like to be able to pay off my mortgage. Based on my calculations of 10 percent TSP growth, I should still have more than enough to reinvest in bond and income funds to provide me with enough income to bring my retirement income up to parity with my final work year salary. This would still leave plenty of money to cover trips, a new car and an inheritance for my heirs. You don't get that with an annuity.

One change that I would have made if the TSP was restricted as you propose would be to put only 5 percent of my salary in it rather than 10 percent. I would put the other 5 percent in mutual funds.

I also take issue with your use of the word "squander." Why is it that if someone does not spend their money the way that you would prefer them to, they are squandering it? Sure, someone can take the money and go to Las Vegas and lose it all, but I suspect that would be a small percentage of FERS retirees. Most would pay off mortgages, help grandchildren pay for college, buy a retirement home, travel and supplement their income. There would probably even be money left for an inheritance.

The days of one-size-fits-all are over. It ended for Russia and China and the federal retirement system. Part of being free is being free to make mistakes. The FERS system provides an adequate safety net for the few who somehow lose it all while providing flexibility for everyone else to plan their lives and futures to their own unique circumstances.

Name withheld

Navy

There is nothing WRONG if that is what the employee wishes. There are as many different circumstances as there are employees. I cannot wait to take my Thrift Savings Plan account and turn it into an Individual Retirement Account so I can make a few bucks with it.

TSP has in no way come close to the returns that are possible managing an account. Why should I not have the ability to leave it and watch it grow? Why should a single person in ill health not be able to do with it as he/she wishes until they are gone?

There has not been an annuity yet that made sense in my opinion. They are very costly for the few benefits derived. Why should I not be able to donate it to charity? If I pass soon after retiring why should not my children have the proceeds instead watching the annuity pass with me?

My position is that an annuity is an option and should never be the only one. When people retire, they are adults and should be able to make those decisions. If they screw up, they did it. If they can make things better for themselves and their, heirs that should also be an option.

I have maxed the TSP since inception. The returns are OK! Where are the options for stellar mutual funds and individual stocks? Why cannot stock trades be done here?

Why put additional restrictions on a program that is good but far from great? Make it a great program, and there could be enough to have an annuity and a pile besides. The current options for placement of funds are lacking in performance.

I am a strong proponent of the TSP and suggest all my employees max as soon as they are hired. I also suggest that the TSP and Social Security will not be enough to sustain a carefree lifestyle. I suggest they put as much as possible into a private account also.

Why are the limits in place? Nearly every other employer permits taxable contributions also. No one is thinking of the new employee that may be 40 plus with no pension plan from former employers.

Federal employees should be intelligent enough to plan retirement around what they have available. Why punish those that can take care of it to protect a few fools?

I probably should not even comment as a CSRS employee with 3 years to go. Especially since my retirement at age 55 will have an income of nearly double my current salary and never touch the principle of my account. That will give you an idea why an annuity forced on me would probably cause me not to participate in the program.

Name withheld

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