TSP Allocation Advice @ 46

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greenheadsmt
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TSP Allocation Advice @ 46

Post by greenheadsmt » Thu Jul 30, 2020 5:52 pm

Folks-

Brand new here, thanks for all the great advice! I'm 46, and work as a wildland firefighter, so blessed with option of early retirement. I''ve been pretty good with my TSP, as well as other investments. I'm able to max my TSP every year, and max my ROTH IRA (Betterment account, Vanguard stuff). For awhile, I foolishly tried to predict the market with my TSP. Since, I've been investing @ 80% C, 10 % S, 10%I, no rebalance, adjustment, etc.

I am hoping to retire from fed service @ 50, and work another job for 10 years or so. I'm pretty risk tolerance, but also aware of the pitfalls nearing retirement. My goal would be to leave my TSP/ROTH alone for that time, and live on pension and supplement, as well as cash from working.

Right now I feel a bit aggressive with my allocation, in addition my other accounts are about that 85/15 ratio of stocks/bonds. Is now a good time to rebalance and adjust that allocation?

Thanks so much!

Bob

02nz
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Re: TSP Allocation Advice @ 46

Post by 02nz » Thu Jul 30, 2020 6:02 pm

It sounds like you may start withdrawals in 15 years or so. You could look at the L2035 allocation for a point of reference: https://www.tsp.gov/funds-lifecycle/l-2035/. It's about 34% fixed income (G & F funds) right now, and that percentage will go up over time. You could go more or less aggressive, but I think the L funds' allocations are broadly sensible.

You'll get more and better answers if you post in this format: viewtopic.php?t=6212

rkhusky
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Re: TSP Allocation Advice @ 46

Post by rkhusky » Thu Jul 30, 2020 6:14 pm

TSP tends to be on the conservative side, so also check out the 2040 and 2045 allocations to see if they are a better fit.

Fishing50
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Re: TSP Allocation Advice @ 46

Post by Fishing50 » Sat Aug 01, 2020 3:22 pm

15 or 20% bonds over the entire portfolio is reasonable for you. Some G Fund in TSP would allow for rebalancing during market lows. Keep Roth IRA and taxable 100% equites to take advantage of long term tax free compound growth and tax efficiency of dividends & capital gains. :beer
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

Fishing50
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Re: TSP Allocation Advice @ 46

Post by Fishing50 » Sat Aug 01, 2020 3:22 pm

15 or 20% bonds over the entire portfolio is reasonable for you. Some G Fund in TSP would allow for rebalancing during market lows. Keep Roth IRA and taxable 100% equites to take advantage of long term tax free compound growth and tax efficiency of dividends & capital gains. :beer
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

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grabiner
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Re: TSP Allocation Advice @ 46

Post by grabiner » Sun Aug 02, 2020 9:50 am

rkhusky wrote:
Thu Jul 30, 2020 6:14 pm
TSP tends to be on the conservative side, so also check out the 2040 and 2045 allocations to see if they are a better fit.
This is changing. The TSP set a new glidepath, but only uses it now for 2055 and later funds. The existing 2030, 2040, and 2050 funds will keep their current allocation until the glidepath catches up to them, rather than increasing their stock allocation to the new glidepath. The 2025, 2035, and 2045 funds will stay between the two established funds rather than moving to the new glidepath immediately; if they didn't do this, the 2045 fund would have more stock than the 2050 fund.

Thus, if the 2040 has the right risk level for you now, you might need to switch to the 2035 in a few years because neither fund's allocation has changed much.
Wiki David Grabiner

rkhusky
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Re: TSP Allocation Advice @ 46

Post by rkhusky » Mon Aug 03, 2020 6:10 am

grabiner wrote:
Sun Aug 02, 2020 9:50 am
rkhusky wrote:
Thu Jul 30, 2020 6:14 pm
TSP tends to be on the conservative side, so also check out the 2040 and 2045 allocations to see if they are a better fit.
This is changing. The TSP set a new glidepath, but only uses it now for 2055 and later funds. The existing 2030, 2040, and 2050 funds will keep their current allocation until the glidepath catches up to them, rather than increasing their stock allocation to the new glidepath. The 2025, 2035, and 2045 funds will stay between the two established funds rather than moving to the new glidepath immediately; if they didn't do this, the 2045 fund would have more stock than the 2050 fund.

Thus, if the 2040 has the right risk level for you now, you might need to switch to the 2035 in a few years because neither fund's allocation has changed much.
The TSP is still more conservative than Vanguard because they reach their terminal allocation (30/70) on the target date, while Vanguard's funds are 50/50 on the target date and don't reach 30/70 until 7 years after the target date.

3funder
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Re: TSP Allocation Advice @ 46

Post by 3funder » Mon Aug 03, 2020 10:39 am

Select the appropriate L fund.

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greenheadsmt
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Re: TSP Allocation Advice @ 46

Post by greenheadsmt » Mon Aug 03, 2020 3:43 pm

Thanks so much for the advice!

Bob

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grabiner
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Re: TSP Allocation Advice @ 46

Post by grabiner » Mon Aug 03, 2020 6:29 pm

rkhusky wrote:
Mon Aug 03, 2020 6:10 am
grabiner wrote:
Sun Aug 02, 2020 9:50 am
rkhusky wrote:
Thu Jul 30, 2020 6:14 pm
TSP tends to be on the conservative side, so also check out the 2040 and 2045 allocations to see if they are a better fit.
This is changing. The TSP set a new glidepath, but only uses it now for 2055 and later funds. The existing 2030, 2040, and 2050 funds will keep their current allocation until the glidepath catches up to them, rather than increasing their stock allocation to the new glidepath. The 2025, 2035, and 2045 funds will stay between the two established funds rather than moving to the new glidepath immediately; if they didn't do this, the 2045 fund would have more stock than the 2050 fund.

Thus, if the 2040 has the right risk level for you now, you might need to switch to the 2035 in a few years because neither fund's allocation has changed much.
The TSP is still more conservative than Vanguard because they reach their terminal allocation (30/70) on the target date, while Vanguard's funds are 50/50 on the target date and don't reach 30/70 until 7 years after the target date.
The TSP is 60/40 five years before the target date, and has a very sharp decline over the last five years.

This makes sense if you intend to convert the TSP to an annuity when you leave your government job, although it is probably too conservative if you intend to draw down the portfolio over time, starting when you retire at 60.
Wiki David Grabiner

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peseta
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Re: TSP Allocation Advice @ 46

Post by peseta » Mon Aug 03, 2020 8:53 pm

3funder wrote:
Mon Aug 03, 2020 10:39 am
Select the appropriate L fund.
Ditto. That's what I am doing, and am in OP's age ballpark. L2035 or L2040. As the great Ron Popeil once said, "Set it and forget it."

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