14 years out, but feel like I'm behind

[wjpennington]

Ok, still have 14 years until my planned retirement date at 67, but it feels like too short a time. I have made some TSP mistakes before, resulting in a low performance in 2020, missing on some gains,, but 2021 has been very good As of yesterday, I turtled up into the G fund with all funds with fund transfer, though I'm still allocated 80% C and 20% S for current buy ins as I anticipate continued drops. I only plan to stay in G for 2 weeks, or shorter, but I just felt the current conditions, plus normal end of September history warranted protecting my gains until I see how September shakes out. I'm hoping to learn how to ride out the dives. if ther is a correction, I dont want to eat all of it, and then i want to rechannnel my protected gains back into the market once it bottoms and starts to claw up.

My main goal is to avoid the worst, but not all drops, and jump on the upswing once its proven to be there. Normally I'm rsk tolerant--but this market has me worried--insanely overvalued, inflation, Washington is..well, even more Washington than normal, that's all I'll say about that.
I'm contributing 15% to the TSP including matching, and each year I'm going to add in my pay raise until I approach the limits. Small Vanguard rainy day fun, also moved to safe defensive shelters this week. What I'm hoping to find is how to recognize and get out before the bottom drops, protecting gains, and how to get back in reasonably once a real rally occurs. I'm very risk tolerant. I have no use for the F &G funds other than as a very short stay emergency shelter, and want to learn the right times to ITF from the various funds--not interested in the L Funds. Even at retirement, I'll probably stay in growth, at least moderate and not play it conservative. I need to make enough only take the earnings, but leave the principal untouched, left in a trust to help take care of my disabled kids when I pass away, with one of my kid acting as guardian. So I'm extra motivated to avoid losses, and willing to roll the dice when the game isn't as crazy as it is now.

 

[flalaw97]

This is a good place to learn how to see the dips and get out on the way down and back in on the way up (can't always get out at the top and back in at the bottom). Everyone here has expressed past mistakes and the mantra is - nothing you can do about the past, only the future. You aren't behind if you are still 14 years out and contributing 15%. I wish I was paying attention 14 years ago.... Best of luck and welcome to the ride.

 

[Maricar19]

wjpennington,

Welcome. Read and learn. This site offers a wealth of information, not only in investing, but also on retirement issues that some of us never thought of.

 

[nasa1974]

wjpennington, Welcome aboard. Lile flalaw said this is a great place to learn. Take some time and read various threads that look interesting. Start your own "Members' Account Talk" thread and join the AutoTracker (helps see how other members are doing). Here is a link you want to look over Rules, TOS & Info - Please Read (tsptalk.com)

 

[Bullitt]

What I'm hoping to find is how to recognize and get out before the bottom drops, protecting gains, and how to get back in reasonably once a real rally occurs. I'm very risk tolerant.

What you are seeking is the holy grail to investing.

I'd be careful with saying you have no use for the F or G funds, especially at your age. Buy and hold is very hard, if not impossible to beat over long periods of time. There is more luck involved than most want to admit.

Have you considered the flipside of what your account would look like if things don't pan out in your favor due to unnecessary risk? Figure out what kind of returns you need to reach your goals and model a portfolio based off of that. Don't forget about catch up contributions.

 

[DreamboatAnnie]

Welcome aboard WJPennington! Sounds like your doing an outstanding job of investing and saving for the future! Adding your yearly increase to retirement us a great way to max out without feeling the pain. That is what I did early in my career and thankful for it now.

I noticed you mentioned TSP savings to leave to some for your disabled children. I would suggest you look into putting some money into Roth TSP or external Roth IRA, if possible. Take advantage of the tax sheltering provided by regular TSP contributions, but also pay tax on some savings going into your Roth to the point where lack of sheltering via regular TSP contributions does not kick you into the next higher tax bracket by year end, and to extent you can afford to pay taxes now for money going to the Roth. That will allow for tax free gains within the Roth and all tax free withdrawals in the future when taxes may exceed anything we are imagining now, and when loved ones must begin withdrawing. Of course, this may work for some folks and not for others. I definitely wish I had started sooner. But you are in very good position to plan for this and execute.

Best wishes to you in your investments. :smile:

 

[Maricar19]

I need to make enough only take the earnings, but leave the principal untouched, left in a trust to help take care of my disabled kids when I pass away, with one of my kid acting as guardian.

Have you looked into ABLE (Achieving a Better Life Experience) which is a tax-free way to save for disability-related expenses, while maintaining government benefits.
We have a disabled son - with high functioning autism. We have been looking for ways and means to leave him some money and yet not lose his government benefits.

However, we are still in the research mode. We have to find a solution fast because we are not getting any younger.

Best of luck.

 

[wjpennington]

wjpennington, Welcome aboard. Lile flalaw said this is a great place to learn. Take some time and read various threads that look interesting. Start your own "Members' Account Talk" thread and join the AutoTracker (helps see how other members are doing). Here is a link you want to look over Rules, TOS & Info - Please Read (tsptalk.com)

thanks, will do-- well, the autotracker at least. i think I'll find out a bit more about what I"m doing before I talk too much

 

[tsptalk]

Welcome wjpennington! Thanks for joining us!

 

[FireWeatherMet]

Since you're over 50, you have NO limits. The IRS Limit for anyone is $19,500 (not incl matching), but if you're in good enough of a personal financial situation, or have a good earning spouse, you can contribute much more than your 15%.
Its called "Catch-Up Contributions" for those 50+.

My main goal is to avoid the worst, but not all drops, and jump on the upswing once its proven to be there. Normally I'm rsk tolerant--but this market has me worried--insanely overvalued, inflation, Washington is..well, even more Washington than normal, that's all I'll say about that.
I'm contributing 15% to the TSP including matching, and each year I'm going to add in my pay raise until I approach the limits.

 

[flalaw97]

Since you're over 50, you have NO limits. The IRS Limit for anyone is $19,500 (not incl matching), ...
Its called "Catch-Up Contributions" for those 50+.

I believe there is still a $6,500 limit on catch up contributions so, other than military, total annual limit (not including matching) is $26,000. But someone check me if I am mistaken.

 

[Maricar19]

Not to forget IRA (Traditional or Roth or combo), max is $7K.

 

[wjpennington]

Well, going to keep upping the amount. I Just hope i'm not mismanaging it. I'm feeling dumber the more I read.

 

[wjpennington]

Welcome aboard WJPennington! Sounds like your doing an outstanding job of investing and saving for the future! Adding your yearly increase to retirement us a great way to max out without feeling the pain. That is what I did early in my career and thankful for it now.

I noticed you mentioned TSP savings to leave to some for your disabled children. I would suggest you look into putting some money into Roth TSP or external Roth IRA, if possible. Take advantage of the tax sheltering provided by regular TSP contributions, but also pay tax on some savings going into your Roth to the point where lack of sheltering via regular TSP contributions does not kick you into the next higher tax bracket by year end, and to extent you can afford to pay taxes now for money going to the Roth. That will allow for tax free gains within the Roth and all tax free withdrawals in the future when taxes may exceed anything we are imagining now, and when loved ones must begin withdrawing. Of course, this may work for some folks and not for others. I definitely wish I had started sooner. But you are in very good position to plan for this and execute.

Best wishes to you in your investments. :smile:

I'm allocatign everything to ROTH right now--the only thing going into the traditional is the agency matching witch they wont change sadly. probably will try to do a back door conversion at 59.5, get as much as possible into Roth. Goal is to get as much tax free. Kansas doesn't tax federal pensions, nor TSP distributions, or TSP transferred into qualified retirement plan, then if I can get the taxable income low enough, no state tax on the social security.

 

[wjpennington]

ok, so , I'm looking at the various premium services. I've come to the realization I'm out of my depth, I'm not going to be able to figure this out on my own anytime soon, and if I rely on my own judgement, I'll just screw things up from hopeless incompetence. But, instead of retreating to a Buy and Hold 70C/30S allocation and not looking back until the year before I retire, which of the premium services here should I consider?

I need ones thats straightforward, weasy to grasp, chart light, clear directions on when to do IFT's, and when to change allocations, and how much. Right now, I'm trapped into G hoping for a downturn, though my purchases are still C/S. But I want to have a direction once I'm free to break out of G Fund jail without a loss.

 

[tsptalk]

Hi wjp,

I sent you a private message with some info about the different services.

Good luck!

 

[Boghie]

One thing to consider is that C/S/I are risk based. Having a 14 year investment time horizon means you can invest all/most in C/S/I. It is tough to find (maybe impossible) a 14 year window where C/S/I would lose to a G or G/F allocation.

Investing in only the G-Fund will give you a second Social Security check - likely actually less since the politicians promise more than the return offers. So, if your Social Security is likely to be $1,400/month than your TSP will provide you about $1,200/month. That is the Alpo Meal Deal Retirement Plan. You do not want to be 'invested' in the G-Fund for any lengthy period of time.

Investing in the F-Fund will do you better, but you kinda need a decent investment base. Again, with a 14 year time horizon, you have to put air quotes around 'investing' in the F-Fund.

Investing in C/S/I will more than double your account every 7 or so years. HOWEVER, there is a timing risk. With 14 years the timing risk is a big 'whatever', but once you are in the 7 year window it becomes a danger point. What I am saying is that you really have about 7 years of pure growth investing left. Somewhere around 7 years prior to retirement you SHOULD have holdings in G and F. Those holdings should eventually cover about 5 - 7 years of expected spending above your pension, Social Security, and other safe income. That means that you have to take risk now to be able to hide a sizeable chunk of safe assets from the market. Does that mean all in? Nope. Does that mean all out? Warren Buffet doesn't ever get all out. Your all out move has been a marginally good move this month and I kinda agree with it, but the best returns happen very early on the bounce backs. What was your allocation on 2009/03/06? If it was all G/F and if you held that crap allocation for another 3 months+ then I would not market time.

Let us look at the Fund returns from 2003/01/01 to 2021/08/31:

[table="width: 500, class: grid"]
[tr]
[td]Fund[/td]
[td]2003[/td]
[td]2021[/td]
[td]Growth[/td]
[/tr]
[tr]
[td]G[/td]
[td]10.00[/td]
[td]16.65[/td]
[td]66.50%[/td]
[/tr]
[tr]
[td]F[/td]
[td]9.97[/td]
[td]21.07[/td]
[td]211%[/td]
[/tr]
[tr]
[td]C[/td]
[td]10.03[/td]
[td]67.96[/td]
[td]677%[/td]
[/tr]
[tr]
[td]S[/td]
[td]10.05[/td]
[td]86.30[/td]
[td]858%[/td]
[/tr]
[tr]
[td]I[/td]
[td]10.17[/td]
[td]39.52[/td]
[td]388%[/td]
[/tr]
[/table]

That included the 2003 recession and the 2008 Great Recession.

So, at this point one of the premium services would be a great investment. It will likely help you avoid the BIG downturns and will also likely get you back in earlier than your gut will otherwise let you. At the seven year mark I would definitely math out what you need over Social Security, your Pension, and other safe income and start moving that to G and/or F. Then if you retire on a day like 2008/12/31 you will have seven years of safe money that will allow your C/S/I to recover and boom.

Happy Hunting...