Vermont Veterans Outreach Personal Financial Counselor provides financial services to Vermont’s Veterans, Service Members and their families. These services include budgeting, debt reduction, retirement planning, and much more. Our Family Program Personal Financial Counselor can assist you in your efforts to become financially stable and independent. The Personal Financial Services integrates within the military life-cycle; from pre-deployment financial preparation activities through transitioning from the military to civilian life. These services are free, confidential and available to Veterans and families residing in Vermont.
By Megan Sather
| VTNG Family Programs | June 26, 2020
The Thrift Savings Plan is adding more Lifecycle Funds to your investment choices in TSP. Each L Fund is made up entirely of the five core funds—G, F, C, S, and I—in different
proportions. The L Funds are target date funds, meaning they automatically adjust as you get closer to the time you plan to retire.
When your target date is far in the future, you can take more risk, seeking greater reward, because you have time to recover from any market downturns before you will need your money. When your target date is close, you may want to be more conservative with your investments. To make that gradual adjustment on your own, you’d have to regularly shift the money in your TSP account from the more aggressive C, S, and I funds to the more
conservative G and F Funds. The L Funds do that work for you.
So, for example, the L 2050 Fund today is 82% invested in the C, S, and I Funds and only 18% invested in G and F. That is because its target date, the year 2050, is still 30 years away. But when we get within a year or two of 2050, the percentages will be close to the other way around. It will still be called the L 2050 Fund, but it will have a completely different investment approach, all without your having to make changes on your own.
The current L Funds are L 2050, L 2040, L 2030, L 2020, and L Income. The years in the names are the target dates. The L Income Fund is for people who have already reached the target date. It is always the most conservative of the L Funds.
TSP is adding more L Funds so that the target dates will be separated by only five years instead of ten. Say you plan to retire within a year or two of 2035. Without these additional options, you would have to choose between the L 2030 Fund and the L 2040 Fund, or maybe split your account between the two. The new L 2035 Fund will allow you to target the time more precisely when you think you’ll need your money.
You can find more information about these new TSP funds at www.tsp.gov
As always please feel free to call or e-mail me if you have any questions about this or any other financial topics you want to know more about.