On the Brink of Retirement

[saturneptune]

It is a real pleasure following the vast wealth of knowledge of all the experts on this board. This last few weeks has really thrown me for a loop.

The problem is I am almost out of time, around 10 months. I had built up to 160K and retreated to the G fund when knocked down to 154. With a few years left, I could care less.

My question is, what would you all do with that amount of time left? The market looks quite unstable to me except for the federal band aids. Any advice would be greatly appreciated.

 

[MohammadXX]

Depends.

In retirement, will you be living on those funds, or leaving them in your account to grow over time ?

 

[Spaf]

Retired, but I take a conservative approach with TSP. Mainly it's a retirement account and second the 1-2 day delay to trade. Generally I'll go 60% safe and 40% equities. For a strong bullish trend, I'll go some more. I use stops of alert=1%, trail=2%. I'm very mindful of overbought and oversold conditions. I like the comments from Tom and Rev Shark. I also follow what Trader Fred has to say. The best months for the DOW are Nov 1st - Apr 30th. I can sit in the G-fund and still make a profit. Just because you retire doesn't mean you can't trade. The L-funds are for buy and holders. And they give a pretty good picture of risk v reward for that type of investor. The thing to remember is if you have a serious loss you are out of make-up-time. So close to and in retirement you have to be cautious (with the exception of having multi-millions). I have retirement monthly deductions of less than 4% annual. So with gains of 7% I've covered my deduction and added for cost of living!
So far so good!
If you want to buy-an-hold, ck out the L-funds. If You want to trade Tom has a great site, just be careful of Mr. Market and folks that think they know.

Rgds.......
Spaf

It is a real pleasure following the vast wealth of knowledge of all the experts on this board. This last few weeks has really thrown me for a loop.

The problem is I am almost out of time, around 10 months. I had built up to 160K and retreated to the G fund when knocked down to 154. With a few years left, I could care less.

My question is, what would you all do with that amount of time left? The market looks quite unstable to me except for the federal band aids. Any advice would be greatly appreciated.

 

[ayla]

If you don't have much experience with the market and you don't feel comfortable about being in the market, you should be very conservative and avoid the more high risk positions.

If you take risks when you aren't basing those risks on your own knowledge but instead on someone else's, you will not be able to sleep at night (like me, LOL) (but you won't have any fun either).

You can do a lot worse than following the TSP.GOV board recommendations or Rev Shark or Trader Fred. (Though I don't -- notice I'm at the bottom of the Tracker in standing -- again LOL)

 

[rokid]

Depends.

In retirement, will you be living on those funds, or leaving them in your account to grow over time ?

MohammadXX asks a key question. In addition, you have to think about what level of risk (volatility) you're willing to endure.

The "rule of thumb" for a sustainable (throughout your entire retirement) annual withdrawal is 4% (same rate as a lot of annuities). Therefore, 4% X 160K = $6.4K. However, historically, you can only achieve that withdrawal rate and stay ahead of inflation, if you allocate some of your TSP dollars to equities (C, S, and I).

Go to this site and run the Monte Carlo simulator to see what is possible, e.g. withdrawal rate, initial balance, expected returns, and probability of success. However, keep in mind, the simulations are based on historical returns - your experience may be different.:laugh:

http://www.firecalc.com/

My personal strategy will be to keep at least 7 years of withdrawal money in G/F. Hopefully, that will sustain me through a bear market. The rest will be allocated to F, C, S, and I. Fortunately, I don't need to draw against my TSP for living expenses.

If you will be relying on TSP for retirement income, you might want to be a lot more conservative. Another rule of thumb is your age in bonds (G/F funds) and 100%-your age in stocks. In other words, if you retire at 60, 60% in bonds and 40% in stocks.

Good luck.------Jim

 

[saturneptune]

If you don't have much experience with the market and you don't feel comfortable about being in the market, you should be very conservative and avoid the more high risk positions.

If you take risks when you aren't basing those risks on your own knowledge but instead on someone else's, you will not be able to sleep at night (like me, LOL) (but you won't have any fun either).

You can do a lot worse than following the TSP.GOV board recommendations or Rev Shark or Trader Fred. (Though I don't -- notice I'm at the bottom of the Tracker in standing -- again LOL)

Thank you all for your thoughts. By the way, what is TSP.gov's recommendation?

I know a person who puts 10% in each of the 10 funds and lets it ride.

 

[rokid]

Thank you all for your thoughts. By the way, what is TSP.gov's recommendation?

I know a person who puts 10% in each of the 10 funds and lets it ride.

One of the L Funds depending on your expected retirement date. In your case, the L Income, the L2010 or the L2020, depending on your tolerance for and need to take risk.

Incidentally, I agree with allocating it and letting it ride. However, I think allocating directly to the five funds (G, F, C, S, and I) or one of the L Funds is simple, straight forward, and allows you to know exactly how your funds are allocated. Based on a number of studies, your allocation determines 80-100% of your expected return and level of risk.

-----Jim

 

[Spaf]

saturneptune,

Check out the L-funds at www.tsp.gov Sounds like the L-2020 could be a fit!

Remember the L-funds were designed for "auto-pilot" folks, not traders. Ifn a participant wants to go 10% in each of the 10 funds, they are free to do so!....At their own risk!
However, I can not find a reference to that kind of an allocation.....

Thank you all for your thoughts. By the way, what is TSP.gov's recommendation?

I know a person who puts 10% in each of the 10 funds and lets it ride.

 

[Birchtree]

When my turn arrives I will continue to ride my Ducati through all the days and nights. I'm very positive on the future.

 

[ayla]

Thank you all for your thoughts. By the way, what is TSP.gov's recommendation?

I know a person who puts 10% in each of the 10 funds and lets it ride.

from the FAQ for the L funds at:
http://www.tsp.gov/lifecycle/flash/qs_as.html#Q10
(if this link doesn't get you there, drill down to the L fund FAQ from their main page)

Question: 10: My time horizon date falls in between the time horizon dates of two of the L Funds. What should I do?

Answer:

You can choose the L Fund that is closest to your desired time horizon date. The following chart can help you decide:
If your time horizon is:
2035 or later Select: L 2040
2025 through 2034 Select: L 2030
2015 through 2024 Select: L 2020
2008 through 2014 Select: L 2010
Before 2008 (or currently
receiving monthly payments) Select: L Income