Actually, keeping 5 years of living expense safe is a method that advisors now use to encourage us to take on more risk in retirement than they have historically recommended. Look at it this way. If you plan on having 20 years of income in your TSP that translates into keeping 25% in the G Fund. That's a third of what the L Fund allocates there. The L Fund is what we are encouraged to invest in during retirement.
So, this is actually a way to increase the growth your TSP account during retirement. Yes, you won't make as much as putting everything into equities, but then you have no protection from another 2008 and in retirement you have no other income to make that up.
Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
Past Returns: 2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%
Here is an article on 3 TSP surprises in retirement that I thought would be appropriate for this thread: 3 Quirks About the TSP in Retirement : FedSmith.com
Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
Past Returns: 2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%
"Too old to rock and roll...too young to die"... - I. Anderson
Cactus, can you please give me some links on the subject below. I haven't come across topics about it. It is very interesting. It is contrary to most of my readings especially the one I just read (Ken Fisher). I would like to understand its logic so that I can safely "surf" during retirement...
Emotions should never play a role in one's investing strategy!
No to Greed...No to Fear!
http://share.robinhood.com/mariloc1
Very good. Thanks!
Thanks Cactus. I have read this before more than once and for some foolish reason, i thought I know it by heart, but it never dawned on me the implications/complications of the withdrawal choices on the realities of life. I thought I had my TSP all planned out. i have an excel showing future monthly withdrawals and adjustments every 2-3 years. But I never thought of the possibility of changes midyear - emergency, unplanned super vacations, etc...I need to fine tune my tsp withdrawal plan!
And I didn't realize about the proportionate distributions. I know about the impact on Roth and regular, but for an unknown reason, i always skipped reading the part "and from each TSP fund in which you have investments."
Thanks Cactus.
Emotions should never play a role in one's investing strategy!
No to Greed...No to Fear!
http://share.robinhood.com/mariloc1
Proportionate distributions! Ugh!
Sent from my XT907 using Tapatalk
One more point about Quirk #3. You have no choice on when they take out your distribution each month.
When I retired I received my first distribution around the 24th which means they take money out of my account around the 20th of every month.
When I asked if they could change the date to the end of the month they said NO.
I am not sure if it really matters but it is a weird time to withdraw. You would think it would be more efficient for them to do everyone's withdrawal at the end of the month and pay everyone at the same time.
Emotions should never play a role in one's investing strategy!
No to Greed...No to Fear!
http://share.robinhood.com/mariloc1
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