Q. I am 25 years old, and recently joined the government. It is difficult to fathom retirement at my age, but I understand that I can get ahead by taking time to address my financial planning needs now.
I don’t really have solid retirement goals. Let’s imagine I will retire around 2050. My investments need to provide support beyond any retirement date. I understand the risks associated with investing in stocks vs. mutual funds. I also understand that I can take more risk at a younger age. And I am comfortable taking on risk. After all, we’re only talking about Thrift Savings Plan contributions. I’m also putting money into a Roth IRA and considering a Roth 401(k).
My TSP contributions are allocated according to the default: 100 percent in the G Fund. LifeCycle funds seem to be recommended and preferred by a variety of folks. What do you think about this growth allocation:
25 percent — LifeCycle 2050
25 percent — C Fund
20 percent — S Fund
15 percent — I Fund
10 percent — F Fund
5 percent — G Fund?
A. I suggest that you consider maxing out your tax-deferred TSP contributions before saving anywhere else for retirement, and then fixing your allocation using the beginning allocation for the L 2050 Fund: 44 percent C Fund, 27 percent I Fund, 19 percent S Fund, 7 percent F Fund and 3 percent G Fund. Rebalance your account to this allocation at least once per year but no more than four times per year. I see no reason to mix the L Funds into the allocation.