Digging Down on Our TSP

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal Employees. It was established by Congress in the Federal Employees’ Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.

TSP includes automatic contributions by the employee and agency matching contributions by the employer.

TSP is overseen by a board and is required to be audited annually.

Nowadays it even has a ROTH option.

It is my Spouse’s primary retirement vehicle.

I thought it was about time to dig down on the numbers and the options to see if we are still on a optimum track to retirement.

Let’s start with Balances;

Boy, Do I love my wife. Here is a pie chart of our current balances.

Here is a brief description of those Funds;

L 2030 Fund – Life cycle fund that balances across the other 5 funds according to age and retirement timeline.

G Fund – Holds U.S. Treasury securities.

F Fund – Holds Government, Municipal, and Mortgage backed Bonds.

C Fund – Holds stocks to try to match the performance of the S & P’s 500 Index.

S Fund – Small to medium sized U.S. companies try to match DJ TSM Index.

I Fund – International stocks, set to pace the MSCI EAFE Index.

G & F face mostly an inflation risk.

C & S face a market risk.

I fund faces market risk as well as currency risk.

Some of this is our money straight from her paychecks, the rest is Agency Base and Agency Matching funds;

We max out the amount she can contribute. The decision these days is how much to allocate to the ROTH option. So far we only have shaved off 3% to go down the ROTH path.

I worry that we have too much allocated to the overly cautions G & F Funds. They are very low/slow growth, but they are also generally safe from market upheavals. I have tried to keep this portfolio somewhat conservatively balanced because we have other piles of money that we get jiggy with.

Here is where the money goes from each new paycheck;

The Returns are admirable. About 51.74%. Right smack near the middle of the Growth Rates for all of our Investments.

We could have pushed that a lot higher, missing those almost 10 years of growth 2009-2018. The money sitting in Bonds/Security funds ($86,000) could have been in the markets getting a higher return (an additional 5.225%). But I also could have flushed all that money down the proverbial toilet had he market dived.

Risk Assessment is Hard work.

I know that Life Cycle funds are no brainers, but I feel better with a little more hands on action.

Savings the best for last, TSP fee rates; 0.033%. Compare that to the other rates I am paying.

This TSP balance translates to the following annuity upon retirement;

TSP balance at purchase Estimated monthly annuity Estimated annual payments
$20,000 $92.60 $1,111
$25,000 $115.75 $1,389
$50,000 $231.50 $2,778
$75,000 $347.25 $4,167
$100,000 $463.00 $5,556
$150,000 $694.50 $8,334
$200,000 $926.00 $11,112
$250,000 $1,157.50 $13,890
$500,000 $2,315.00 $27,780
$750,000 $3,472.50 $41,670
$1,000,000 $4,630.00 $55,560

On top of this, the FERS system also provides a smallish pension, calculated as such;

Date Est. Hi-3 Avg. Salary Without Survivorship

(Yearly / Monthly)
With Max. Survivorship

(Yearly / Monthly)
Annuity To Survivor

(Yearly / Monthly)
Retirement Type
03/14/2031 $134,038 $42,552

$3,546
$38,292

$3,191
$21,276

$1,773
Optional Unreduced

(Earliest Date)

Together with her Social Security Benefits, she will provide a substantial contribution to our Finish Line Numbers.

 

 

 

 

10 thoughts on “Digging Down on Our TSP

  1. Love my TSP made huge gains since I retired in 2012. I do a small rebalance every so often when the markets hit a rough patch.

    This is what I wish they would give us the option for instead of SS

  2. you plan to buy an immediate annuity with all or part of it? it’s something i’ve looked into but we still have some time to work. that’s a pretty nice pension in my book. i’m going to write a post about the benefits of w-2 employment. one of those benefits is the 80,000 or so in matching funds my employer has paid in 11 years. that doesn’t even include the gains. it’s not all bad being a wage slave.

    • There certainly are some perks! I just wish she did not have to go to 57 to keep her health care. If that changes, we could leave much sooner.

  3. I changed my allocations about a year ago. I used to be invested heavily in the “target date” fund, but now I’m allocating almost exclusively to the C and S funds (with a little I mixed in). I’ll rebalance as I get closer to retirement (or withdrawing), which is still a long ways away. My growth has also been doing great!

  4. The size of your burial mound, given a traditional Viking pyre send off, must show your prowess – excellent planning my warrior friend. The tumulus at the family cabin must rival Stonehenge.
    I look forward to the new 2019 TSP withdraw options the feds have promised in 2019. You, Nords and MilitaryDollar will be my first references to the upcoming changes. Thanks for the posts

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