Q. I don’t understand what you mean by invest in the L Fund based on your life expectancy. My husband plans to retire in 2014 when he turns 62. If his life expectancy is 85 years old, does that mean he should put his money in the L2020 or L2030 Fund? He is still employed, but his Thrift Savings Plan money is in the L Income Fund. A. Recommendation to invest in the L Fund that most closely corresponds to your life expectancy (or joint life expectancy with your dependent) assumes that you don’t have the basis for a more suitable…
Browsing: investment
Q. I am retired and turn 70 this month. Even though I do not want to begin distribution of my Thrift Savings Plan investment, I understand that by law I must select a required minimum distribution program. My dependent spouse is 76 and also retired. I am healthy and, with my family genetics, could expect to live to age 100. I do not need the TSP to live on and want to maintain it in the TSP investment form for as long as possible. Under these circumstances, what is the best RMD to select: a life annuity or a TSP monthly payment? Should it be…
Q. Has there been any analysis over the cost/benefit of drawing Social Security at age 62, banking the money in a conservative investment instrument such as T-bills and drawing down on it at age 70 along with the reduced SSA amount using a 20-year amortization rate? A. There has been much analysis done on the timing of claiming Social Security benefit. I analyze the options for every one of my clients who haven’t already made the choice. You didn’t ask, but I’ll assure you that there is no universal result to this analysis. What will work best for you depends…
Think you can accurately predict the future? It seems that many Thrift Savings Plan investors do. TSP-related message boards and online forums are filled with posts from participants who are obsessed with trying to position their accounts to either take advantage of, or defend against, this or that anticipated turn of events. In some cases, this is smart; in others, it’s not. In the case of rising interest rates, for example, the current environment makes higher future rates all but certain. This unusually high probability, along with the availability of an attractive substitute for bonds in this environment, make substituting…
Q. I am fairly new to investing in the Thrift Savings Plan, having been active in it for about three years. I am 31, with about $3,800 and contribute about 13 percent of my pay into the L2040. When I started, I had 60 percent G Fund/40 percent C Fund. Am I going the right direction when I moved into the L Fund? A. Probably.
Q. I’m 53 years old and plan to retire in 10 years. My current Thrift Savings Plan balance is $131,000, and I’m 100 percent allocated into the L2040 fund. I’m very aggressive in my investing. Should I allocate my TSP 60 percent C Fund, 20 percent S Fund and 20 percent I Fund instead of the L 2040 fund, which allocates in all of the funds to include the G and F funds? A. You’re the investment manager, so you’ll need to use your process for determining the correct allocation of your TSP funds. If I were responsible for the…
Q. I have been a CSRS retiree since Jan. 3, 2002. I turned 69 on July 14. What should I do with my Thrift Savings Plan funds at my age? What are my options? A. You may invest your TSP money in any of the available investment funds or use the money to buy a life annuity. The investing option allows you to retain control of the principal but bring with it the risk of loss. The annuity will guarantee income for life, but you’ll give up the principal. You’ll have to determine which is appropriate for your particular situation. There is…
Q. Regarding “Government default and TSP rollover” posted Oct. 15: He asked whether he should roll over his account to USAA and you said you wouldn’t. Could you explain more on why you wouldn’t and the benefits of leaving it in the Thrift Savings Plan account? A. The TSP’s lower costs and access to the G Fund make it the best retirement investing vehicle available anywhere. You can configure portfolios with better risk-adjusted expected rates of return in the TSP than anywhere else. Of course, using the TSP’s attributes to your advantage is requisite to the choice.
Q. What would happen to the Thrift Savings Plan investments, specifically the G, F and I funds, if the government can’t raise the nation’s debt ceiling before the Oct. 17 deadline for default? Are we looking at another financial meltdown like we had in 2008? A. The G Fund will hold its value. The other funds are vulnerable to loss in value. So far, however, the stock markets aren’t predicting disaster. They’re in good shape as of today – still near their multiyear highs. You should accept that predicting future market behavior is a risky thing to do. If your financial…
Q. I have read Q&As on your site that refers to using one’s life expectancy as basis for selecting a particular L Fund. Per the Thrift Savings Plan site, L Fund investment mixes (and recommended strategy for selecting) are based on the time horizon vis-a-vis one’s projected retirement date — hopefully a different date than one’s life expectancy. Could you please explain the reference to life expectancy? A. Using your life expectancy to select an L Fund, rather than your retirement date, is my recommendation based on years of working with clients who are trying to safely maximize the standard…