Brand new here to Rockstar. Here’s our dilemma. Hubby is retiring in 12 weeks from the government. Our money is in a TSP and we have to decide what to do with it. We are very simple people. We have enough income and liquid savings to be comfortable, meaning we don’t need an additional income stream. We are VERY conservative money wise. Risk scale #2 What should we do with our $80,000? It has been in a G Fund, we are more concerned with safety then return. We went to a finical advisor and the red flags went up for us any help or direction would be greatly appreciated. Thanks~Michele
I don’t have a clue but I’ll refer you to my cuz, @RetirementManifesto. He may have some ideas for you! Good luck and happy retirement to your hubby!!
Why do you want to move it? Is there a specific reason. I would leave it there. There is no requirement for you to leave the TSP when you retire. You can take out money if and when you need it. I guess you understand that you are probably actually almost loosing money as the G fund I don’t think is keeping up with inflation right now. Have you thought about the 2020 Lifecycle Fund as that would be very conservatively invested and you might keep up with inflation. Other wise keep it there. I am a Govie with a TSP account.
Thank you Iam, guess I need to do some more research. I think the longest we can keep it in the TSP is 1 year after retirement, maybe because of hubby’s age? I was wondering about the lifecycle funds…I will check it out
Congratulations on your husband’s “almost there” retirement.
As Iam mentioned, I believe you can leave the funds in the TSP. However, their withdrawal rules do limit your options. You are only allowed one partial withdrawal. After that one, you would need to withdraw the entire remaining balance or annuitize it. It sounds like you don’t need the income, so annuitizing it doesn’t make a lot of sense. If you think you might make periodic withdrawals for some reason (vacations, car replacements, etc.), you’re pretty much forced to remove the money from the TSP. If you don’t think you’d make periodic withdrawals, then leaving it in the TSP is an option. Understand that the G fund may provide returns lower than inflation, so over time you will lose purchasing power.
If you do roll it out, move to Vanguard (or a similar low-cost option). The greatest plus of the TSP is the low fees, and Vanguard comes really close!
One other idea to consider: If you never anticipate needing the money (as your income is coming from other sources), you are really saving it for your heirs, who may be much younger than you. If so, you may want to consider investing a portion of it in the stock market. I fully understand you have a low risk tolerance, which is perfectly fine! But if your heirs are younger, their time horizon may be so long, that equities make the best investment option. Of course, if you want to leave it as back up plan for your financial needs, invest it in accordance with your risk tolerance and need for risk.
Good luck and let me know if you have any questions about my reply.
Thanks for your response John
Thanks for tagging me, cuz. @michieluvsu, I’m not as familiar with the TSP as I am a 401(k), but I understand the macro issue. As Iam said, I would question why you have to move it. Unless there’s a specific fund you’re trying to get access to that’s not in your TSP, I wouldn’t be in a hurry. Take the year to investigate your options and learn the facts of your plan. If you must move it, I assume you can do a rollover into an IRA. If that’s the direction you’re leaning, I’d give Vanguard a call and talk through it with them. Make sure you do a fund to fund rollover to avoid getting slammed with a taxable event.
Thank you, sitting tight right now. I’m a newbie and this group has already been so helpful
You could also consider rolling it out into a platform like Fidelity, where you could assemble a CD ladder at no cost which would probably outperform any G fund you’re using and keep the money equally safe.
Is your husband CRS or FERS? If he is FERS you might subscribe to the FERS Guide at fersguide.com. The author is a retired FBI agent with an accounting background. He started the guide for his coworkers and it has grown to his post retirement job. It is $10 a year. I found it very helpful to start thinking about Federal retirement. Totally worth the money.
You mention your husband’s age. I forgot about manditory age requirements for minimum withdraws. So many feds I know retiring are under 60 so I guess I just assumed he was younger and the mandatory withdraws would be years down the road.
Thanks for that info Iam, yeah hubby is old