Q. In an April 2011 answer to a question about the lifecycle funds, you noted that the Thrift Savings Plan suggests choosing the L Fund that most closely matches your retirement date and putting 100 percent of your money there. You said you recommend investing in the L Fund that most closely matches your life expectancy rather than your retirement date. Why? Isn’t this going to put your money at risk when you’re older and can least afford to be risky with your money?
A. This is my default recommendation, and it recognizes the fact that, in most cases, your financial time horizon isn’t your retirement point; it’s the end of your life. I don’t think that someone who retires at age 50 should implement the same investment allocation as someone who retires at age 80, but that’s what the TSP’s recommended method for choosing an L Fund will produce. The truth is that everyone should select the investment strategy that supports their personal goals with the least risk possible. Unfortunately, most people don’t have access to the kind of analysis needed to figure this out. My recommendation is the next best thing.
