For Planning purposes

[Zebra]

Ok, several of us at work are nearing retirement. I plan to leave my money in TSP, where I have most of it in the C and S fund, with a little in G. I plan to do the monthly withdrawal. My question is when using the TSP Monthly payment calulator, it ask for a annual percentage of what you think the funds will earn. To be on the safe side, what would be a good number to plug in the calulator???

 

[nnuut]

I think 7%, 4% for you 3% for inflation. You may make more, that's just gravy! You may make less, but think positive!!

 

[Spaf]

Yea Zebra, I agree with Nnuut!
Inflation about 3% and withdrawls of 4% or less. I like the idea of saving the nest egg!
You can later make changes to your withdrawl provided you notify TSP prior to December 15th.
Spaf

 

[MohammadXX]

Ok, several of us at work are nearing retirement. I plan to leave my money in TSP, where I have most of it in the C and S fund, with a little in G. I plan to do the monthly withdrawal. My question is when using the TSP Monthly payment calulator, it ask for a annual percentage of what you think the funds will earn. To be on the safe side, what would be a good number to plug in the calulator???

Depends on your percent in equities, interest rates, and how the market does each year. It's a long term average. For example, check TSP.gov site historical returns for C fund---years 2000 thru 2006---and take average. I've withdrawn $2,100 mo. since April without reducing principle.

 

[rokid]

I plan to leave my money in TSP, where I have most of it in the C and S fund, with a little in G.

Almost 100% stocks would normally be considered a risky strategy. You might want to run your strategy through Firecalc Monte Carlo to determine its probable success rate.

http://firecalc.com/firecalc.php

 

[EW_ret]

For a mostly equity portfolio, 7% is low for an average return. I use 7% average return for my target allocation witch is 40/40/20 Equity/Bonds/Cash. Even this 7% return is conservative for my target allocation which is 7.5%. The Vanguard site shows model portfolios (Equity/Bonds) and the returns over past 30 years (1926-2006):

90/10 10.2%, 80/20 9.8%, 70/30 9.4%, 60/40 8.9%

I use these estimates and subtract 1% or so to be more conservative. For an 80-90% equities use 9% for the average return. I use 8.5% return for 70/30, and 8% 60/40. Of course everybody is different when it comes to the method you use for estimating returns. Past performance is no guarantee of futures performance.

 

[Zebra]

Excellent information by all. I now have a better understanding for planning purposes. I think I will go with the conservation side of 7% and instead of getting !