Q. I am separating from the military in January 2014. From there, I will be pursuing my education. I will be 60 in 2042. My Thrift Savings Plan is 100 percent G Fund. I stopped my TSP contribution and started the Roth TSP because I like the idea of not paying tax when retirement comes. I am aware that the account needs to be in place for five years and can only be withdrawn at age 59½, and that the money is deducted from taxed income. Is this a wise decision? Since my traditional TSP can’t be transferred to TSP…
Browsing: L Fund
Q. I’ve been retired a couple of years now and I’ve transferred the money I had sitting in the G Fund to one of the L funds. I chose the L 2020 fund, mainly because I’ll turn 70 in five years and will be forced to start withdrawing the required minimum distribution. I’ve read that you suggested putting money into the L Fund that closely corresponds to one’s life expectancy. Does that mean how long I plan to live, or is that determined by a doctor or some other expert? A. If you’ve had a full physical exam within the…
Q. I am 26 years old and have been working in the federal system for three years. I am a GS-9 Step 2 and contribute 7 percent of my income to my Thrift Savings Plan. Since I have a long ways to go before I retire, I would like to know what percentage I should put in each fund, if any? A. I suggest that you consider investing your money in the L Fund that most closely corresponds to your life expectancy.
Q. I notice that in several of your responses to people requesting guidance on how to allocate their Thrift Savings Plan account, you use as a ‘default’ answer to choose the L Fund that most closely corresponds to their life expectancy. The guidance on the TSP Web page advises the following: “Determine the date when, after leaving federal service, you will need the money that is in your TSP account. Then identify the L Fund that matches your target date.” If I’m 51 and plan to retire and begin tapping my TSP at age 59, according to the TSP guidance, I…
Q. I have worked in the GS system for 13 years, and I have always taken out the maximum percentage allowed for my Thrift Savings Plan. For the past 13 years, I have put everything into the G Fund. I am not very educated on which funds to invest in. At this time, I have $165,000 in my TSP account. I would like to know which funds I should invest in and what percentage would best suited for me. I am 42 years old, and I plan to work until I am 65 to 67 years of age. A. You’ve…
Q. If I am 52 years old and have all of my contributions in the L Fund now at 100 percent, and expect to retire in 2028, what would you recommend on how to distribute my percentages among the other funds? A. This is like asking what kind of car you should buy. The correct answer depends entirely upon what you expect the car to do. If you don’t know what to do, you can pick the L Fund that most closely corresponds to your life expectancy and use that. This is like choosing to buy a four-door sedan, though.…
Q. Someone had a recent question about Thrift Savings Plan fund investment options in a speculative market, and I noticed in reading some of the comments at blog.federaltimes.com, a recommendation of “What’s safer than either the G or F Funds, alone, is a combination of all five funds at once. Without stocks, how are you going to hedge the risk of owning the G and/or F funds?” Doesn’t being in one of the L funds do that for you? Also, would you move your TSP funds out of the TSP at retirement into an IRA? A. Yes, the L funds…
Q. I’ve been with the federal government going on 27 years and am a FERS employee. I don’t have much in my Thrift Savings Plan — barely over $30,000. Shouldn’t I have more? Due to my grade level, I can only contribute 1 percent, maybe 2 percent. How should I distribute the percentage to get the most out of it? Should I put in 50 percent into the G Fund, 10 percent into the F Fund, 10 percent into the C Fund and so on? Where should my percentage go that will give me the best return on my investment?…
Q. I am 25 years old, and recently joined the government. It is difficult to fathom retirement at my age, but I understand that I can get ahead by taking time to address my financial planning needs now. I don’t really have solid retirement goals. Let’s imagine I will retire around 2050. My investments need to provide support beyond any retirement date. I understand the risks associated with investing in stocks vs. mutual funds. I also understand that I can take more risk at a younger age. And I am comfortable taking on risk. After all, we’re only talking about…
Q. Since I won’t be forced to take the required minimum distribution until six years from now, I’m going to take your advice and transfer my money from the G Fund to one of the L funds. I can’t put money into the Thrift Savings Plan anymore, since I’m retired. How do I determine which L Fund to put my money in? A. If I were you, I’d put my money into the L Fund that most closely corresponds to my life expectancy.