Q. Why do you consider the TSP Monthly Payment Calculator useless? I have only G Fund allocations now that I am close to my FERS retirement of 34 years. I have even transferred all dollars from a traditional IRA into the TSP for ease of management and greater total G fund assets. My retirement stool has four legs: military reserve retirement, FERS, early Social Security income and TSP. The calculator allows us to put in any part of our accumulated expected TSP value that we desire for retirement supplementation and somehow calculates that against expected growth without any future contributions other than earned interest.If I chose a monthly payment that is too small, it tells me I need to plan to withdraw a higher amount. I don’t know why.It tells me, based on the calculations, that I can expect to deplete my TSP account in X number of months.From what I have read the G fund has a historical 5.76 percent annual payback. I watch it daily now and it is increasing $15+ a day. So if I assume that the annual percentage is possibly going to drop to 3 percent for the next X number of months and it is actually higher, I will have funds paying out for a longer period. So explain why you feel it is useless please.
A. Because it assumes a constant, predictable rate of return, which, as you’ve pointed out, will not actually occur. Its output is based upon a false assumption: That your account will produce exactly the rate of return you predict each and every year. Kind of like saying: “If you could flap your arms and fly 1,000 miles per hour, you could travel from Washington, D.C., to San Francisco in three hours.”
