L Fund and longevity


Q. I’ve read articles that are beginning to convince me that the TSP L funds are too conservative
when the L fund “year” is based on the nearest year of retirement. It has been suggested that one should choose an L fund based on estimated longevity. Essentially, select an L fund by adding 20 or 30 years to your planned year of retirement, depending on your health, family history, etc. I am presently in L2020 and plan to retire in late 2018. Maybe I should be in L2040 or L2050.
What are your thoughts on this?

A. I know that it’s been suggested. I’m the one who suggested it. If you’re not sure which investment strategy is right for your particular circumstances, I suggest that you use the L Fund that most closely corresponds to your life expectancy. That should support the highest safe lifetime income from those resources. What you won’t know without the right analysis is what that maximum safe lifetime income amount is.


About Author

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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