Q. I plan to retire next year at age 62 and my financial adviser suggests moving my TSP money into American Funds or a similar funds manager because I will have very limited flexibility drawing money from TSP if I stay there. My problem is the sales charge will take a good chunk of money to do that and the TSP expenses are low. I have money in a 401(k) that is currently invested in staggered CDs and I thought I would move it into the TSP instead of transferring the money out of the TSP I have in there now. What are your thoughts?
A. When in doubt — and in most cases, in general — I recommend that you maximize the amount of your retirement savings in the TSP. In many cases, you will likely be better off taking monthly withdrawals that you don’t need from the TSP and then reinvesting the after-tax proceeds into a taxable account, than moving the money to a higher-cost alternative.
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At age 62 it may not be advisable to “invest” in any fund with a sale (or redemption) charge. If you want to look at funds, consider looking for a low-risk, no load fixed income ETF.
And keep in mind that most investment advisors are being paid to sell AF (and other mutual fund) products.