'Bucket strategy'


Q. Is there any way to manage one’s Thrift Savings Plan account so as to effect a bucket strategy of withdrawal? My reasoning is that not all funds will be up in any one year. I would like to have a three-to-five-year bucket (G Fund) for the lifetime monthly withdrawals and a six-to-10-year bucket for asset growth (C, S and I funds). Periodically, I would move money from the longer-term bucket to the shorter-term bucket. As it stands now, withdrawals come out of each fund based on the percentage in each. My reasoning is that the rock bottom expense ratios are unbeatable by any other brokerage or mutual fund company.

A. You should understand that a “bucket” strategy is just a way of thinking about an underlying investment strategy. There’s no need to actually segregate your money into different “buckets” since, even if you do, your portfolio will still be in some overall asset allocation scheme, from which you’ll take your withdrawals. So, yes, you can do what you need to do in the TSP, and you should do it there. You’ll just have to interpret your TSP allocation and withdrawal scheme into whatever “language” you want to “speak.”


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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