Q. My understanding is that the TSP lifecycle funds do not change allocation percentages based on projected market trends and changes in risk. For example, a lifecycle fund would not increase the percent in G funds if they thought a bear market was nearing. So, if Forbes is right and a bear market looms, what is the best way to minimize loss in one’s TSP lifecycle fund? Should we drop back from lifetime expectancy L fund selection to actual expected retirement timeframe for our L fund? When is the recommended time to do this? A. Market timing is pretty simple,…
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Q. I understand how and why the L funds such as the 2020, 2030 and 2040 adjust themselves as you get closer the target date. I don’t understand why the L Income Fund adjusts itself, since isn’t it the consistency of the Income Fund that retirees are after? A. The stated goal of the L Income Fund is “to achieve a low level of growth with a high emphasis on preservation of assets.” I can’t tell you why they decided to use this method to achieve this goal, since it isn’t necessary, but that’s the way it is. Remember that…
Q. I was speaking with a Thrift Savings Plan representative recently and they said that not all of my years working with the federal government were vested. I started my career with the Federal Deposit Insurance Corporation (FDIC), then went to DoD, and now I’m with the Department of Veterans Affairs. I have 25 years served all together with just one break in service of two years. Do I need to speak with each agency to see if I’m vested? A. From the TSP Bulletin 15-1: Thrift Savings Plan Vesting Requirements and the TSP Service Computation Date: The TSP Vesting…
Q. I have often read you stating to put your TSP in the L Fund most closely matching your expected life expectancy if you are not able to analyze the market (which I am not able nor willing to hire someone to do that). I am a former FERS employee, retired at age 56. I am now 59 and I only have $120,000 in my TSP and hope to wait until age 70 (or just leave it alone for my sons), if possible. I wondered if the L Fund most matching your life expectancy is suggested for a current employee…
Q. I’m a FERS employee. As I reach retirement and knowing about my retirement and Social Security, what is the best way to maximize my TSP? If I have $1 million in my TSP, would moving the money from the C Fund to the G Fund and implement the 4 percent rule without wavering on my withdrawals would I run out of money? If the G Fund pays 1-2 percent every year I still seem to leave this Earth with money remaining. Looking at 4 percent calculation models, if you’re making an average above the 4 percent you wind up…
Q. Do you see any advantage in periodically transferring funds from my 403b to my TSP? The 403b is invested in a life-cycle fund from Vanguard, so the fees I assume are pretty low. The only advantages I see are I currently have access to funds if needs in my TSP as I was a law enforcement officer and have provision to access this as I retired with over 20 years in federal law enforcement. But I don’t plan to withdraw for a long time (I’m 53) and perhaps the TSP fees are even lower then Vanguards? I assume transfers are…
Q. What is your opinion of the so called “bucket” investment strategy for retirement in the TSP, with a “now,” “soon” and “later” allocation? The now being a three-year time frame in the G Fund for a safe flow of income, the soon 3-5 year in the L-Income that would be less conservative and the later maybe investing in the Lifecycle Fund corresponding to life expectancy for more aggressive growth? I realize the allocations would have to be updated regularly. With such a strategy, would it be best to make adjustments monthly, quarterly or annually?
Q. Will the TSP allow retirement withdrawals by fund allocation? I want to set aside a portion of my account in the G Fund for secure monthly income. I would like to keep the remainder as a growth fund – primarily invested in stocks and bonds. I want to avoid drawing any percentage out of this growth fund during temporary or cyclical market reversals. If this withdrawal strategy is not allowed, is transferring funds out of TSP the only way to achieve my money management goals?
Q. I have roughly 20 years of federal service left. My funds are split between the S Fund and the L2040. Is that where I will get the best return on investment?
Q. I currently have $165,000 in my TSP in the L30 fund. Should I leave it there for my remaining nine years or switch to the C Fund for more growth?