TSP investing tips: Wisdom of the crowd

When it comes to investment strategies, many Thrift Savings Plan participants have a plan. They need one because anywhere from one-third to one-half of all their income in retirement will come from Uncle Sam’s version of a 401(k) plan.  The rest of their retirement income will come from their FERS annuity and Social Security if they qualify for it.

A growing number of workers and retirees are TSP millionaires who did it the old-fashioned way:  They invested the maximum — over an average of 29 years — in the TSP’s C and S (stock) funds during both bull and bear markets. They didn’t head for the G fund during the Great Recession.

Some investors take the long-view, and put most or all of their money in the stock market C, S and I funds. Then they ride out the bad times in hopes the market, over time, will make them money.  Others play it super-safe putting most or all in the low-yield stable treasury securities G fund.  For them the risk is that over a long period in retirement inflation could eat into nestegg.

A growing number of investors are opting for the self-adjusting L (as in Lifecycle) funds.

Over time, the investments get more conservative (bonds and the G fund) with less exposure to the stock markets ups and downs. The L funds should become even more popular when they are expanded next year and the I fund includes stocks from more international companies.

Meantime here’s a reader with a problem. A good problem:

 Dear Mr. Causey:

I work for the US Postal Service. I have currently $317,000 invested in my TSP account. I have 50 percent in the C fund, 40 percent in the S fund and the remainder 10 percent in the I fund. I am 66 and plan to retire on 12/30/2022.  I am currently receiving my Social Security benefits that started in the beginning of this year when I did turn 66, my full retirement age.

I know my portfolio is aggressive for my age group, so I wanted your suggestions for my current mix of percentages in the funds I have chosen. Also, I am hearing of a major stock market crash in the near future and wanted to know if I should leave things alone or to start changing my portfolio choices and start transferring money into the G fund.

I did nothing back in 2008 when I was just as aggressive back then and my funds dropped between $30,000-$40,000 at that time.

I was told my countless financial advisers to leave my money alone and do absolutely nothing, so I took their advice. All my contributions now are going to the Roth portion of my TSP.  I currently have the majority into the traditional part.

Around $248,000 is in the traditional part, $52,000 in the Roth part.  We were allowed to contribute into the Roth in May 2012, and I started my Roth portion in March 2013 and continue to do so. I am contributing 10 percent of my base pay per year and intend to more than double that percentage in another year from now.

Just purchased a new home, so things are a bit tight for now.

Thank you in advance for any helpful suggestions that you can give me.”

— David

My response?

David,

I am not qualified to give any financial or investing advice. But I have an idea. How about if I run your email (minus name or the fact that you are a PM) and ask readers? We’ve got a batch of TSP millionaires out there and lots of successful investors in their 60s who probably fit your profile. Might get some good ideas from them which I could also run as a column.  Let me know.

Thanks,

Mike

PS: Looks like you have done all the right things to me!

He gave it the green light, so the ball is in your court.

If you have any tips either general or tailored to this 66-year old, send them to me mcausey@federalnewsradio.com  And as always, we love hearing from you TSP millionaires or those approaching the magic mark!

Nearly Useless Factoid

By Steff Thomas

From 1912 until 1948, the Olympics held competitions in the fine arts. Medals were awarded for architecture, literature, music, painting and sculpture.

Source: Huffington Post

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THRIFT SAVINGS PLAN TICKER

Jan 19, 2022 Close Change YTD*
L Income 23.2370 -0.0418 5.42%
L 2025 12.0123 -0.0416 9.75%
L 2030 42.4100 -0.2089 12.37%
L 2035 12.7366 -0.069 13.43%
L 2040 48.2006 -0.2854 14.51%
L 2045 13.2007 -0.0839 15.40%
L 2050 28.9215 -0.1967 16.34%
L 2055 14.2471 -0.1212 19.90%
L 2060 14.2468 -0.1212 19.90%
L 2065 14.2466 -0.1211 19.90%
G Fund 16.7502 0.0007 1.38%
F Fund 20.4474 0.0506 -1.46%
C Fund 68.4639 -0.6691 28.68%
S Fund 75.8418 -0.9523 12.45%
I Fund 38.8694 -0.2076 11.45%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.