TSP Funds, Lifeycle Funds

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Topic Author
EMDW
Posts: 79
Joined: Thu Jul 04, 2013 11:18 am

TSP Funds, Lifeycle Funds

Post by EMDW » Sun Oct 12, 2014 6:12 pm

Please help with TSP funds for a friend:
35 years old, single, 28% tax bracket, assume retirement at age 65, began work for the fed this month. Retirement options: TSP funds (G, F, C, S, I funds, lifecycle).

https://www.tsp.gov/investmentfunds/lfu ... ce_L.shtml

Questions:
1. The traditional TSP or Roth TSP or both?
2. Which lifecycle funds for hands off?
3. Which combo of funds would be similiar to the 3 fund portfolio?

Thank you.

Laura
Posts: 7975
Joined: Mon Feb 19, 2007 7:40 pm

Re: TSP Funds, Lifeycle Funds

Post by Laura » Sun Oct 12, 2014 6:16 pm

At that tax bracket the traditional TSP is the best option. Are there any other accounts like roths, IRA, old 401, etc?? The L2040 or L2050 would be appropriate options. They basically are a version of the three fund portfolio. If there are no other investments then I suggest a Lifecycle fund.

Laura
The views presented are my own and not necessarily those of the Department of State or the U.S. Government.

Topic Author
EMDW
Posts: 79
Joined: Thu Jul 04, 2013 11:18 am

Re: TSP Funds, Lifeycle Funds

Post by EMDW » Sun Oct 12, 2014 6:24 pm

She has about 3K in a fidelity money market account in an IRA from previous employee. Thank you.

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grabiner
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Re: TSP Funds, Lifeycle Funds

Post by grabiner » Sun Oct 12, 2014 8:22 pm

The TSP equivalent of the 3-fund portfolio uses the G fund for bonds, 80%C/20%S for US stock, and I for international. The G fund is better than the F fund (TSP equivalent of Total Bond Market Index) because it has no risk; when rates rise, the F fund loses money, but the G fund doesn't change and starts earning the higher rates the next day.
Wiki David Grabiner

nanoanalyzer
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Re: TSP Funds, Lifeycle Funds

Post by nanoanalyzer » Sun Oct 12, 2014 9:43 pm

Someone age 35 in the 28% bracket will have a high likelihood of:
1. Eventually making it to 33% due to regular raises.
2. Having a significant pension waiting at the other end to fill up the low tax brackets in retirement.

Roth/traditional TSP is not so cut-and-dry in this situation.

http://thefinancebuff.com/most-tsp-part ... h-tsp.html

...In fact, I am still waffling on this decision myself. Would be interested to hear more thoughts on this topic, but would love to see some hard data and calculations.
"If you think stocks are like physics, you believe there must be smart people who can measure exactly where the Dow Jones Industrial Average will be in five months." -Morgan Housel

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