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
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.
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.
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!
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.
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
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.