What does Dave Ramsey recommend for TSP?
Dave Ramsey's advice is to save 5% into the TSP to get the full match, then max out a Roth IRA, and then put more into the TSP if you are able to save more after that.
Like other voices, he recommends a portfolio with 100% equities but recommends a breakdown of 60% C Fund, 20% S Fund, and 20% I Fund.
The G Fund is invested in short-term U.S. Treasury securities specially issued to the TSP. Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.”
The G Fund is up 1.15% so far in 2022. That is normally not a great return, but it is the only TSP fund with a positive return in 2022. The G Fund serves as a source of relative calm in a volatile market.
C Fund is Best Performing TSP Fund Over 12 Months
Among the core TSP funds, the fund with the worst performance over the past twelve months is the S Fund which is down 5.31%. The G Fund is up 1.56% over the past twelve months. The S Fund also finished the month with a positive return of 0.90%.
On the opposite side of the volatility spectrum, the S Fund (small cap U.S. stocks) has the largest annualized standard deviation: 21.44% as of this writing, and is therefore the riskiest.
It's really tempting to cash out your TSP account to pay for them. But that is almost always the worst thing you can do. Most experts agree that taking money out of your TSP (or any tax-free or tax-deferred) retirement account before you turn 59½, the normal minimum distribution age, isn't smart.
Increase your contributions each year
Most people don't start contributing the maximum their first day on the job, therefore it is important to increase your contributions as you start to make more. Every time you receive a COLA or a step increase you should consider increasing your TSP contributions.
Depending on when you begin retirement, you can simply leave the money in the TSP let it continue to grow. If you do not need to access it yet, it might be wise to let it be. Similar to other retirement accounts, you will need to begin minimum withdrawals at age 72.
As of December 31, 2020, the S Fund outperformed the C Fund over the last 1, 3, 5, 15 and 20 year periods. The C Fund outperformed by a small amount over the last 10 years. Despite the S Fund's historical record of outperforming C, TSP participants invest three times as much in the C Fund as the S Fund.
Is TSP better than 401k?
While they may not have as many funds to choose from, TSP participants do have one big advantage over most 401(k) investors: lower fees. The total expense ratio, which covers both investment and administrative fees, is 0.055% for individual TSP funds.
F Fund investors are rewarded with the opportunity to earn higher rates of return over the long term than they would from investments in short-term securities such as the G Fund.
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TSP Performance as of April 26, 2022.
After a brief rebound in May, the federal government's 401(k)-style retirement savings plan continued a descent last month that has lasted nearly the entirety of 2022. The international stocks of the Thrift Savings Plan's I Fund saw the worst performance in June, falling 8.21%.
Dave Ramsey's TSP (Thrift Savings Plan) Advice: The Good, Bad, and ...
What many people are aware of, but overlook, is the fact that the TSP has the lowest administrative fees in the 401(k) business. Even lower than Vanguard, which prides itself on minimal fees. For lots of math-challenged people (like me), low fees are less important than performance.
The C Fund can be useful in a portfolio that also contains stock funds that track other indexes such as the S Fund and the I Fund. By investing in all segments of the stock market (as opposed to just one), you reduce your exposure to market risk. The C Fund can also be useful in a portfolio that contains bonds.
In short, even if the recommendation is sound, any financial professional who recommends you move money from the TSP into an IRA could benefit financially from that move.
And while most states tax TSP distributions as well, these 12 don't: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming, Illinois, Mississippi and Pennsylvania.
Most federal employees and their spouses will face Social Security taxation. ent of a Social Security dollar. In effect, the withdrawal from the TSP triggers two taxes—the tax on the TSP dollar and a tax on your Social Security that you wouldn't have had to pay otherwise.
How do I avoid paying taxes on my TSP withdrawal?
If you want to avoid paying taxes on the taxable money in your TSP account for as long as possible, do not to take any distributions until the IRS requires you to do so. By law, you are required to take required minimum distributions (RMDs) beginning the year you turn 72.
If you choose the invest-for-the-long haul course you may, as 112,000 rank-and-file federal and postal workers have done, become a TSP millionaire. Maybe with $2-3 million which, along with your steady federal annuity and inflation-indexed Social Security will guarantee you a better retirement. As in much better.
The TSP C-Fund which approximates the S&P 500, has had an average annual 12.29 percent gain between 1988 and 2020; the TSP F-Fund, a broad index representing the U.S. bond market, has had an average annual 6.29 percent from 1988 to 2020; and the G-fund, long term U.S. Treasury notes, has had an average annual of 4.70 ...
For most, the Roth TSP is the better choice because currently, you're in a lower tax bracket than you'll be in the future. With a Roth, your earnings and withdraws are tax-free because you contribute after-tax money, meaning you pay taxes upfront.
The number of millionaires in the Thrift Savings Plan (TSP) dropped to 100,364 as of March 31, 2022 (the end of the first quarter in 2022). As of December 31, 2021, there were 112,880 TSP millionaires, so the drop in Q1 2022 represents a decline of 11% over Q4 2021.
At 30, you should have half of your annual salary saved. By 40, you should have twice your salary, and by 50, you should aim for about four times your salary in retirement savings.
Roll your TSP assets into new employer's 401(k) plan
This is a good option if your new employer's 401(k) plan has strong investment options and low expense ratios. Another thing to consider is reducing the number of investment accounts you have to keep track of, maintain, and balance.
If interest rates rise, how much can the F Fund lose? The longer a bond's duration, the greater the volatility and potential losses when interest rates change. The F Fund holds thousands of bonds of various durations.
Average TSP account balances for Uniformed Service Members reached almost $30,000 by the end of 2019, while balances for new 'Blended Retirement System' (BRS) participants reached close to $7,000 in just two years since the BRS became operational.
The only way to prevent 401(k) losses is to park your money in cash investments. But that also means you are not likely to achieve your retirement goals. Investing in equities is one of the best ways to generate the kind of returns needed over the long term.
Is now a good time to invest in TSP?
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Is Now The Best Time to Invest in The TSP?
| Sally | Frank | |
|---|---|---|
| Balance at Retirement | $563,000 | $569,000 |
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The G Fund Has Seen Better Days.
| Year | Return |
|---|---|
| 2020 YTD | 0.76% |
The Interfund Transfer (IFT) is the way you move your money between the TSP funds. Ideally, you want your money parked in the funds that are increasing over time. When the stock market is trending up, you want to have your money primarily in the C,S, and I funds.
| Date | Interest Rate |
|---|---|
| December 2021 | 1.500% |
| November 2021 | 1.625% |
| October 2021 | 1.500% |
| September 2021 | 1.375% |
If interest rates rise, how much can the F Fund lose? The longer a bond's duration, the greater the volatility and potential losses when interest rates change. The F Fund holds thousands of bonds of various durations.
