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Thread: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the market

  1. Default Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the market

    Well, as a recent retiree who hopes not to tap my TSP for at least the next five years, I have reallocated from a position of approximately 90% stock funds, 5% F fund and 5% G fund to 100% G fund. While the budget/deficit heat seems to have cooled a bit over the last week or so, it's hard to see much upside in taking the risk of staying in stocks or bonds -- at least in the context of the easy and free movement among the various fund categories in the TSP -- when there appears some potential to lose mightily and not much incentive to stay in until the debt ceiling issue is resolved. Or, at least until the can is kicked by Congress down the road in a fashion that won't have people staying awake at night. (On the non-TSP side, I have sold off some stocks that were ripe, but am not doing a wholesale redistribution. On the other hand, I won't be eating cat food if those investments don't go quite as I would like.)

    I'm a little surprised that not that many people seem nearly as nervous as I, but even assuming the debt ceiling issue does not result in default, it is hard for me to envision that the "game of chicken" will not create some significant turbulence in the market. And it's a little hard to believe that I'll be missing a great opportunity for a market run-up in the next month or two. Further, if it turns out that there is a major dip, it might provide a good buying opportunity and the chance for me to de-leverage some from stocks without unduly sacrificing growth opportunities.

    I guess we'll see!


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  3. #2

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    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Are you living off your CSRS pension now?

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  5. Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Hi pmcint01,

    I'm a "young" retiree, so in my case its my FERS annuity plus the "bridge" payment they give folks who have yet to reach social security retirement age. Not exactly a ton of money, but enough that I don't think I'll need to tap into my TSP before 65. (Oh, and a younger working wife!:)

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  7. #4

    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Quote Originally Posted by NigelSt.Hubbins View Post
    Hi pmcint01,

    I'm a "young" retiree, so in my case its my FERS annuity plus the "bridge" payment they give folks who have yet to reach social security retirement age. Not exactly a ton of money, but enough that I don't think I'll need to tap into my TSP before 65. (Oh, and a younger working wife!:)
    Good for you! I will also enjoy this in the next 3-6 years. As a LEO, I will draw the "bridge" until 62, then deplete my TSP by age 70. Then I will take the max SS (depending on what SS is at that point).

    Question: Did you pick up part time work as well to supplement your income?
    Official Retirement Date: 06-31-2014!

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  9. #5

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    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    I've actually been beginning to give this debt ceiling play some thought as well. I'm not sure if G is the best choice, though.

    Couldn't the value of the dollar be hit pretty hard?

    I've actually been considering moving more into the I-fund. The problem is that the world markets tend to follow the US markets. Not always, but a lot. I agree that the US markets will likely take a hit if this debt ceiling thing goes on too long. I'm thinking I-fund because if the dollar drops, that helps the I-fund. The I-fund may drop some too if the US markets get whacked, but it may bounce back quicker.

    Then again, a weaker dollar may help the S&P 500 by making US goods more attractive to international buyers. It will also impact the cost of oil. Which will tend to have the opposite effect.

    You can see why I said beggining to think about this issue. There is a lot to unpack....
    A distribution of monkeys throwing darts to choose their allocations would likely have produced a higher performer ...-Desperado ... My Account & My Account Talk

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  11. #6

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    Smile Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    To All,

    I think we saw a preview of the 'Debt Ceiling Calamity' when S&P 'downgraded' US Federal debt. The 'I Fund' DID NOT act as I expected. I was going to run to the 'I Fund', but now am strongly leaning toward the 'C Fund'.

    Headin' to the 'G' . Only if you have faith that the 'G Fund' will stay liquid as the Treasury raids it for billions (last years May deficit was over $135 Billion). While James is 100% correct when stating that the 'G Fund' remained liquid when previously raided, the scope of this fiasco is quite different. In FY2006 the Bush Administration amassed an annual deficit of a little less than $250 Billion. In FY2011 the Obama Administration will amass an annual deficit of a little more than $1,600 Billion. I don't think the 'G Fund' is guarranteed to be liquid under that pressure.

    By the way, the Treasury will bring in over $400 Billion over the months of April and May. In that time they will have two months of debt payments of about $45 Billion.

    They (we) could avoid default by paying their debt payment first.

    Then come the hard, very hard, decisions.
    Lookin' up at the 'G Fund'!!!

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  13. #7

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    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    http://www.fedsmith.com/article/2876/what-happens-your-tsp-funds-if.html
    What Happens to Your TSP Funds If the Debt Limit is Not Raised?

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  15. #8

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    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    I'm not worried about the "G" fund being raided and us not having access to the money not that we would lose any money in the G-fund at all TSPIntel.

    I'm more concerned about how the market will react, short term and long term.

    Sure would be nice if we had a precious metals fund....
    A distribution of monkeys throwing darts to choose their allocations would likely have produced a higher performer ...-Desperado ... My Account & My Account Talk

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  17. Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Hi Sky Pilot,

    Actually, I have applied for a limited number of jobs that I was truly interested in with federal agencies, on the Hill and with some consulting firms. (I left my SES job because I had an extremely bad relationship with my boss. The one thing she said that I ever believed is that she wasn't leaving anytime soon. The best reason to "retire" that I can imagine.) Having your "final boss" despise you is not a ticket to success. Nor is being 57 years old. I am reoriented myself toward doing some consulting and volunteer work. At this point everything is "gravy" as I don't need to gain income (though I certainly wouldn't mind it!) and am more concerned with getting some pleasure and satisfaction out of what I do with my time.


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  19. #10

    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Quote Originally Posted by NigelSt.Hubbins View Post
    Hi Sky Pilot,

    Actually, I have applied for a limited number of jobs that I was truly interested in with federal agencies, on the Hill and with some consulting firms. (I left my SES job because I had an extremely bad relationship with my boss. The one thing she said that I ever believed is that she wasn't leaving anytime soon. The best reason to "retire" that I can imagine.) Having your "final boss" despise you is not a ticket to success. Nor is being 57 years old. I am reoriented myself toward doing some consulting and volunteer work. At this point everything is "gravy" as I don't need to gain income (though I certainly wouldn't mind it!) and am more concerned with getting some pleasure and satisfaction out of what I do with my time.
    Right there with ya! Know a retired Air Marshall friend, and he is having a great time (CSRS era). Hope I am in the same boat. 400K would do the trick, and it seems possible now... just eek out about 8% average per year for the next few, and I'm in!
    Official Retirement Date: 06-31-2014!

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  21. Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    Dear TSPIntel,

    Thanks for the link to your helpful article. It basically confirms what I had pieced together in terms of the G fund being a "safe haven." Maybe the debt ceiling imbroglio will have little bearing on the markets, but I'm afraid I'm a mite long in the tooth to want to ride it out if things get nasty. Plus I am skeptical that there can be a lot more juice left in this bull market we have been riding.
    Last edited by NigelSt.Hubbins; 04-30-2011 at 06:16 AM. Reason: typo

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  23. #12

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    Default Re: Avoiding TSP calamity given debt ceiling impasse -- I'm now "all out" of the mark

    NigelSt.Hubbins,

    I think you will be surprised at how little a huge reduction in Federal spending will affect the private sector. You have to remember, we are spending $1,190 Billion more (in 2010 dollars) than we were in FY2000.

    The bubble is us.

    We will feel it, the private sector will rejoice...
    Lookin' up at the 'G Fund'!!!

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