am i going in the right direction

d.olverson

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Hi all great site, i am in the Army i am 28 Yrs old and have 11 yrs to retirmennt. My current situation is 50% in G, 15% in F and 35% C i invest 9% of my pay a month i have been in the TSP for 3 yrs.

I also am starting my Roth IRA this month at $100 a month and will collect 50% pension at 38. is this enough to finaly retire for good at age 58.

I relly don't move my TSP around as long as i see a profit on the 3 month statemnet. I hope i can land a goverment job after the army and continue to invest in the TSP.

I could use anyhelp or advise about what i am doing wrong are what i can do better.
 
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d.olverson wrote:
Hi all great site, i am in the Army i am 28 Yrs old and have 11 yrs to retirmennt. My current situation is 50% in G, 15% in F and 35% C i invest 9% of my pay a month i have been in the TSP for 3 yrs.

I also am starting my Roth IRA this month at $100 a month and will collect 50% pension at 38. is this enough to finaly retire for good at age 58.

I relly don't move my TSP around as long as i see a profit on the 3 month statemnet. I hope i can land a goverment job after the army and continue to invest in the TSP.

I could use anyhelp or advise about what i am doing wrong are what i can do better.
Please provide rank and time in service. I'll make the excel worksheet data for you. Thanks...

Pyriel
 
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d.olverson,

A rule of thumb is that you can safely withdraw 5% a year of your nest egg in retirement. In other words, if your TSP account has $1M, you can withdraw $50K a year and not run out of money.

Since you have 30 years to retirement and a guaranteed military pension, you might want to reduce your bond allocation and increase your stock allocation, i.e. take on more risk to achieve a higher return. For example, a reasonable long term allocation might be:

20% F Fund, 45% C Fund, 15% S Fund, and 20% I Fund

However, the amount of risk to take is specific to your situation, e.g. risk tolerance, amount of assets, and return requirements to achieve your goal. In addition, you can't have higher returns without exposing yourself to increased risk. Low risk='s low return. There are no low risk, high return investments, i.e. no free lunch!

Good luck.
 
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d.olverson wrote:
E-5 (P), TIS=10 yrs Thanks .
Here is your computation with your current allocation and contribution. Computation will change when you decide to increase your contribution for tsp or roth. Promotion will also make a difference on the computation.

Current 10% target rate might be too high based on your allocation. Your allocation is very conservative and might not make the 10% return indicated in the worksheet. Hopefully by being around this board, you can make better decision on how to allocate your funds...

Good luck...

Pyriel
 
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d.olverson

Historical returns indicate your current allocation will provide an expected 8.3% average nominal return with a standard deviation of 6.7%. However, your expected real average return (nominal return - inflation) is 5.3%.

If 5.3% will meet your goals, fine. However, at your age you might want to increase your risk exposure to achieve a higher average return. For example, the expected average nominalreturn fora 20% F/45% C/15% S/20% IFund allocationis 11.4% with a standard deviation of 14%. The expected real average return is 8.4%.

Finally, Tom's sample buy and hold portfolio of 20% in each fund yields an expected average nominal return of 10.2%, i.e. 7.2% real return, with a standard deviation of 10.5%.

In other words,theoretically, you can adjust your risk by altering your fund allocations to achieve the desired return.


 
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WOW that was great info thanks,If that is correct i will be very happy at age 58. One more question does inflation relly count aginst me if we get a 4% raise every year to off set it whichis thenpass over to my TSP. And should i still do the roth IRA or place that money in the TSP.
 
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d.olverson,

If it were me, I'd max out the TSP and invest any leftover in an IRA. TSP is a really good deal. Expenses for all of the funds are extremely low.

Pay increases will offset inflation in your contributions. In other words, if you increase your contribution by 4% a year, it will remain a "real" $2,615.However, inflation will still eat into your overall TSP returns by an historical average of 3% per year. Of course, for long periods of time, e.g. late 1970's, inflation could be significantly higher reducing your return even more.
 
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d.olverson wrote:
WOW that was great info thanks,If that is correct i will be very happy at age 58. One more question does inflation relly count aginst me if we get a 4% raise every year to off set it whichis thenpass over to my TSP. And should i still do the roth IRA or place that money in the TSP.
There are lots of thread with the pros and cons of TSP vs. ROTH here in this board. Check them out and you will see alot of different ideas from different people. What works for one might not work for the other. For me, I maxed out on both. Next year max tsp contribution goes up to $15k. Are you ready for that? Not too many people are not. Some are...

Pyriel
 
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