L Fund

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Q. On reading some of Mike Miles’ column, I see him advising to invest in the L Fund most closely matching your life expectancy. So is he saying that at 60, I should invest, say, in L2040? Would he recommend this even if/when I begin withdrawing money regularly for retirement income replacement?

A. That is what I have recommended you consider doing if you’d like to maximize the standard of living your money will likely support over your lifetime. Of course, if you’re managing your money, you’re ultimately responsible for the outcomes.

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  1. Just to point out from the TSP website “The L Funds’ strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a particular time horizon, or target retirement date.”

    In other words, the L funds are based on their adjusting to the L income fund near your expected retirement date. The idea with the L income fund is preservation of your nest egg while minimizing any inflation loses. While I understand this is a potentially conservative stance for the L funds and your investing, it should be clear basing a choice of the L fund on a life expentancy date is *not* the stated intent of the funds as they were created and you are exposing yourself to volitility and the stock market.

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