Post-Retirement TSP allocation?

[zinger1457]

The thing is with the newer retirement system, (FERS, of which I am), a person needs to be savvy on money, markets and how to handle their money. CSRS...you don't need to. With FERS, you need to watch what the markets are doing and managing your investments.

With FERS you do have to be disciplined and make the necessary contributions to TSP but I don't think you really need to be all that market savvy. Unless you're real close to retirement just set up automatic deposits into a L fund of choice and let it be. Trying to maneuver your funds around to account for changes in the market will be a losing cause for most investors.

 

[unno2002]

[FONT=&quot]I'm retired FERS. At the earliest possible moment, I rolled my entire TSP account out to an IRA type account that could invest in real estate. A sample purchase: 2 bedroom, 1 bath, 1 car garage, red brick, about 3 mile from the college. Bought early 2013 for $77,500, rented for $805/month. After tax, insurance, etc. it’s dumping around $7000 (9%) a year tax-deferred into the account. Since we don’t need the money yet, I keep putting it back into improvements in the house. Compare this to an annuity from the TSP program.[/FONT]
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[FONT=&quot]https://www.tsp.gov/planningtools/retirementcalculator/retirementCalculator.shtml[/FONT]
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[FONT=&quot]If at my retirement I had chosen that option, and allocated $77,500 to it, and wanted an annuity for my lifetime, which would continue for the wife's lifetime, TSP would only have offered a FIXED annuity of $306 per month or $3,672/year (4.7%) . No inflation adjustment. If the wife and I both died (say in the same car accident) the kid would have gotten nothing.
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[FONT=&quot]With the rental inflation is again rising the dollar value of the the house, and I could probably raise the rent, and the kids has a prospective inheritance.
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[FONT=&quot]With the money in an IRA type account, if you want you can pick the same investments as within the TSP, but the options are LOTS wider.[/FONT]

 

[Cassie]

"Now with CSRS...all you have to do is show up at work, do your time, go for the promotions, and retire with your annuity. No worries about the markets, investing and an account. You get your retirement with COLA no matter what happens. Another recession...no problem. And if you are smart enough to be investing in the TSP, you will be way farther ahead and could retire on 80% of salary in 30 years instead of slaving away for, (what is it), 42 years to get to an 80% annuity."

Hi Redbugdave .....to get 80% of salary under CSRS takes 42 years too. At 30 years it's only 56.25 of your top 3. Yippee it's payday time!

 

[Gunny]

"If I was still in TSP I'd be 20% in each, G, F, C, S, I, for a 60/40 split, I am about 70/30 now in my roll over IRA due to owning a few individual dividend stocks.

20% each would have averaged 8.76% per year for the last 10 years. Only 100% S fund would have beaten you. But you'd have to suffer through some serious losses from time to time.

Here is the 10 Yr Compound for the G, F, C, S, and I from the TSP Website. 3.39% 4.65% 7.44% 10.43% 7.08%"

What am I missing? When I average the 10 Yr average compounded return of all funds I come up with a return of 6.6%, not 8.76%? Is it that the 8.76% is before inflation and the compounded returns are after inflation?

 

[RE2Boys]

Now with CSRS...all you have to do is show up at work, do your time, go for the promotions, and retire with your annuity. No worries about the markets, investing and an account. You get your retirement with COLA no matter what happens. uexpress[/URL]

CSRS was a pretty good deal, but there has not been any new CSRS employees for about 30 years. It's an old plan that is ancient history and slowly dying out just like private sector defined benefit plans.

 

[Ragna]

Fers/csrs

One underappreciated issue with FERS is in addition pensions ~ 1/2 of the old CSRS system, there is no COLA until age 62 and then a reduced COLA (up to 1% loss) each yr after. That will result in a substantial loss in pension over a 30-40 y period. If you do the math based on past inflation, in 30 yrs a FERS pension could easily be reduced 30-60%. Still better than no pension so not complaining, but retirement in the later stages will likely depend heavily on TSP.

 

[martyb]

"Now with CSRS...all you have to do is show up at work, do your time, go for the promotions, and retire with your annuity. No worries about the markets, investing and an account. You get your retirement with COLA no matter what happens. Another recession...no problem. And if you are smart enough to be investing in the TSP, you will be way farther ahead and could retire on 80% of salary in 30 years instead of slaving away for, (what is it), 42 years to get to an 80% annuity."

Hi Redbugdave .....to get 80% of salary under CSRS takes 42 years too. At 30 years it's only 56.25 of your top 3. Yippee it's payday time!

Well, technically, it takes 41 yrs, 11 months to get to 80%, but who's counting?

I only made it to 72%, but that's enough, time to go!

 

[Kaufmanrider]

"If I was still in TSP I'd be 20% in each, G, F, C, S, I, for a 60/40 split, I am about 70/30 now in my roll over IRA due to owning a few individual dividend stocks.

20% each would have averaged 8.76% per year for the last 10 years. Only 100% S fund would have beaten you. But you'd have to suffer through some serious losses from time to time.

Here is the 10 Yr Compound for the G, F, C, S, and I from the TSP Website. 3.39% 4.65% 7.44% 10.43% 7.08%"

What am I missing? When I average the 10 Yr average compounded return of all funds I come up with a return of 6.6%, not 8.76%? Is it that the 8.76% is before inflation and the compounded returns are after inflation?

I agree with your, 20% each. I am in the same boat as your in retirement, 60/40 in the Paul Merriman Ultimate Buy and Hold and 24 dividend paying stocks puts me at 71% stocks, 29% bonds.

I calculate the last 10 years 20% each as 8.08%, from a website that tracks the actual 20% each return annually. Maybe dividend reinvested?

 

[Redbugdave]

One underappreciated issue with FERS is in addition pensions ~ 1/2 of the old CSRS system, there is no COLA until age 62 and then a reduced COLA (up to 1% loss) each yr after. That will result in a substantial loss in pension over a 30-40 y period. If you do the math based on past inflation, in 30 yrs a FERS pension could easily be reduced 30-60%. Still better than no pension so not complaining, but retirement in the later stages will likely depend heavily on TSP.

That's a good point Ragna. That's why we need to be proactive about our TSP and also have IRA's, too. Social Security will help and it has COLA, too. Most of my fellow employees did not contribute to any IRA's either. It's going to be bad for them unless they have inheritances waiting for them in the future.

 

[Cassie]

Well, technically, it takes 41 yrs, 11 months to get to 80%, but who's counting?

I only made it to 72%, but that's enough, time to go!

I'm with you...only made it to 72%. When I went to HR the specialist asked me, didn't I want to get 80%.... LOL, NO!

 

[martyb]

I'm with you...only made it to 72%. When I went to HR the specialist asked me, didn't I want to get 80%.... LOL, NO!

Well yes, I'd love the 80%, I'm just not willing to work another 4 1/2 years to get it!

 

[martyb]

I moved all of my TSP funds into the L-Income fund. I can already tell I'm not going to be satisfied with such a conservative position. Re-evaluating. My main concern is when I'm no longer able to make contributions.....starting in about 3 weeks. Currently I'm contributing $1000 every 2 week pay period, but only have 2 of those remaining.

 

[Redbugdave]

And remember Marty...when you get your lump sum payment for AL...go ahead and put it into IRA's for this year if you have not maxed them out already.

Also, the way I look at it...you will be needing your TSP for about 30 years and you might as well be letting it grow all the time. Just keep the money invested in the best funds depending on the market cycle if you don't roll the money over into Vanguard funds like Wellesely, etc.

 

[Federal LEO]

TSP allocation in Retirement

I confess I spent way to many hours studying TSP fund allocation early during my 25 year career. I read a lot of the Bogleheads's material and became convinced I did not want to waste my time and energy chasing short term gains and time the market. Rather, I wanted a simple plan that would transition between my working career and my retirement years.

I finally decided Age minus 10 was the appropriate bond allocation for me considering my FERS pension and social security. I set it at the beginning of each decade and rebalance once per year on my birthday.

Ages 20 to 29 = 10% G-Fund / 90% CSI Funds (example only: S & I Funds not available until 2005)
Ages 30 to 39 = 20% G-Fund / 80% CSI Funds
Ages 40 to 49 = 30% G-Fund / 70% CSI Funds
Ages 50 to 59 = 40% G-Fund / 60% CSI Funds (Current allocation at 2014 retirement age 51)
Ages 60 to 69 = 50% G-Fund / 50% CSI Funds
Ages 70 to 79 = 60% G-Fund / 40% CSI Funds
Ages 80+. = 70% G-Fund / 30% CSI Funds

I have done well enough for me and I sleep better at night.

 

[martyb]

TSP allocation in Retirement

I confess I spent way to many hours studying TSP fund allocation early during my 25 year career. I read a lot of the Bogleheads's material and became convinced I did not want to waste my time and energy chasing short term gains and time the market. Rather, I wanted a simple plan that would transition between my working career and my retirement years.

I finally decided Age minus 10 was the appropriate bond allocation for me considering my FERS pension and social security. I set it at the beginning of each decade and rebalance once per year on my birthday.

Ages 20 to 29 = 10% G-Fund / 90% CSI Funds (example only: S & I Funds not available until 2005)
Ages 30 to 39 = 20% G-Fund / 80% CSI Funds
Ages 40 to 49 = 30% G-Fund / 70% CSI Funds
Ages 50 to 59 = 40% G-Fund / 60% CSI Funds (Current allocation at 2014 retirement age 51)
Ages 60 to 69 = 50% G-Fund / 50% CSI Funds
Ages 70 to 79 = 60% G-Fund / 40% CSI Funds
Ages 80+. = 70% G-Fund / 30% CSI Funds

I have done well enough for me and I sleep better at night.

Federal LEO, are you equally invested among the CSI, as in 20% each fund? Looks like you have no F fund (bond).

 

[Federal LEO]

Equally invested which gives me 2/3 Total U.S. Market & 1/3 International.

Never been a fan of F-Fund especially when I'm confident we are going to see a long term slow increase in Treasury rates.