Q: I read your May 3 piece regarding the G Fund. You said it should represent 10 percent or less of an investor’s Thrift Savings Plan assets. Maybe I’m not understanding correctly, because the suggested G Fund distribution in the L Funds has 32 percent in the L 2020, 64 percent in the L 2010 and 74 percent in the L Income. My opinion is that these are very high percentages, but I also think your 10 percent is rather low. I’m not currently in the L Funds and probably won’t be. I plan to retire in 2014 so I…
Author Mike Miles
Mike Miles
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.
Q: I’m working for the federal government and plan on retiring there. I wanted to get some information on the Thrift Savings Plan. I have about 10 percent going to the G Fund and was wondering whether you recommend it or whether I should move my money into another fund. A: Unfortuantely, I can’t provide you with specific investment advice because I don’t know nearly enough about you, your goals and your circumstances. You can learn more about the TSP by visiting the TSP website.
Q: I am an active-duty soldier participating in the Thrift Savings Plan. I do not get a matching contribution. My money is invested in the S and I Funds, and this week I have lost $4,000. My investment had been exclusively in the G Fund, and my account was slowly growing. When I switched money in February from the G Fund to the I Fund, I began to make more money. I want to switch back to the G Fund for stability but am afraid that since the share prices are lower, the value of my account will drop because…
Q: I made a deposit to the Federal Employees Retirement System for 20 years of military service and have been working for the federal government for 10 years, which gives me 30 years of federal service. If I was to resign today, at age 50, would I continue to keep my military retirement pay until I reached my minimum retirement age (56) and could start drawing my FERS retirement? Will the FERS retirement consist of 10 years of Social Security Supplement, FERS and my Thrift Savings Plan payout, or would I have to wait on the TSP? A: Because you…
Q: How much money can you take out for your one-time withdrawal without tax penalties? I am retiring under 6c, federal law enforcement retirement, at age 50. A: Unless you meet one of the special exceptions to the early withdrawal penalty, the amount will depend upon your life expectancy and the calculation method you choose. This excerpt from my July 23, 2007, Money Matters column should help: “Another exception to the early withdrawal penalty — one that is available to anyone — is to take distributions before reaching age 59 1/2 as a series of so-called substantially equal periodic payments…
Q: I noticed that today (May 6), the G Fund lost value ($0.01 per share). I don’t understand how this can be. I would greatly appreciate an explanation. A: The price you cited in your question was incorrect. The G Fund’s closing price on May 6 was $13.2680 per share, and on May 5 it was $13.2669. Recent share prices for the G Fund and for other Thrift Savings Plan investments can be found at http://www.tsp.gov/rates/share-prices.html.
Q: I am five years away from retiring. My husband retired at age 48 in 2000 with $300,000 in his 401(k). He went to a financial planner and set up an annuity. The way it was written, he couldn’t change the dollar amount he was allotted. Needless to say, his money ran out this year. I have 30 percent of my income invested in the Thrift Savings Plan, all in the G Fund, hopefully not making the same mistake with the stock market. Should I go to a financial planner to have a monthly annuity made up? I don’t want…
Successful retirement investing depends more on avoiding serious mistakes than it does on realizing exceptional gains. Cash flows from your portfolio when investment values are depressed can cause damage that won’t be repaired later by better returns. If you withdraw $10,000 from a portfolio when it is worth $200,000, you’re withdrawal represents 5 percent of your portfolio. If, alternately, you withdraw that same $10,000 from your portfolio after its value has fallen to $100,000, you’ve now withdrawn 10 percent of your portfolio’s total value. A withdrawal rate of 5 percent might be sustainable over 20 or 30 years, but a…
Q: I have checked your Q&A and have asked several people about the special retirement supplement (SRS) and can`t seem to get an answer. I’m a 56-year-old Postal Service employee with 22 years of service. Rumor has it there will be another VERA (early out). My two questions are, if I go out on VERA will I be able to take money out of my Thrift Savings Plan account without early withdrawal penalties even though I`m not 59 1/2 years old? I know I will be eligible for SRS. Will the fact that I will be getting SRS, an annuity…
Q: Many financial advisers recommend a retiree include Treasury Inflation Protected Securities (TIPS) as part of the fixed-income portion of their portfolio to protect against rising inflation. Although TIPS are clearly different securities than those in the Thrift Savings Plan’s G Fund, it appears there are some similarities in both their composition and their returns over time. As TIPS aren’t available in the TSP (nor should they be, in my opinion), what are the pros and cons of using the G Fund as a substitute for a TIPS (IRA) fund in the fixed-income portion of a federal retiree’s portfolio? A:…