Investment allocation and being prepared


Q. I am a federal employee and have been eligible to retire for a while, but I wasn’t ready until now. Within nine months I will have retired. I am one that converted way back when from CSRS to FERS. I am 67 and a half years old (already drawing my SSA, which I started at 65 when I reached 100 percent) and will be 68 and a half years old when I retire. Within 2 years after retiring, I will be required to start taking my minimum withdrawals. Several things: I am concerned with the recent money market fluctuations and had been doing well with my current TSP distributions of 25 percent for G Fund, 50 percent for C Fund and 25 percent for S Fund, but now I am nervous about just riding this out as I watch my TSP balance go down. What are your thoughts on the matter? Do you have any advice as to what I should do with my MRW when I am forced to take withdrawals in the neighborhood of $15,000 to $20,000 a year (Traditional TSP)? I have heard good and bad things about a ROTH account; I want to be able to get to my money if and when I need it. I am not money market/stock market savvy enough to totally understand my options. Perhaps I should sign up for monthly allocations when I retire. But then I still don’t know what to do with that money and how best to save it.

A. Your investment allocation is pretty aggressive and contains stocks and cash, but no bonds, which is a mistake. The time to deal with a market decline is before it occurs, not after. Don’t make the common mistake of being most aggressive at market tops and least aggressive at market bottoms. You should have been getting less aggressive as markets rose and reached new highs, and if and as they fall, you should get more aggressive, if necessary.

Your questions make it clear that you don’t know much about managing an investment portfolio to produce retirement income. This is a complex topic and there are no easy, one-size-fits-all answers. I suggest that you visit the Federal Retirement University website to begin your education about managing your resources for retirement.

Until you know more, you might want to consider investing your TSP account in the L Fund that most closely corresponds to your life expectancy. It’s not a perfect solution, but it’s better than the one you’re using now.


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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 and view his blog at

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