TSP: Reduce Investment Risk When You Get Close To Retirement

TSP: Reduce Investment Risk When You Get Close To Retirement

One of the best things about the Thrift Savings Plan (TSP) is that you have control over your investments. With the TSP offering different investment options, you can develop a strategy that spreads risk across several funds to help maximize diversification and increase growth potential.

Early in your career, you can tolerate more investment risk because you have many years to recoup after a significant drop in the stock market.

For example, during the 2008 economic crisis and stock market meltdown, many TSP participants moved all their savings into the “safe” G Fund. However, those who chose to stay the course with their investments reaped the rewards when the market rebounded.

Of course, the closer you get to retirement it’s wise to consider lowering your TSP investment risk because you’ll no longer be working and, at some point, you’ll be withdrawing funds for living expenses. However, there’s no such thing as a one-size-fits-all TSP strategy because everyone has a different financial situation. That’s why it’s a good idea to work with a retirement advisor who understands your federal benefits.

Get A Second Opinion On Your TSP Strategy

Before you make any big changes to your TSP, consider meeting with a Federal Retirement Consultant ℠ (FRC). Every FRC℠ certified professional has passed a background check in addition to successfully completing comprehensive training in the FERS/CSRS retirement systems, the Thrift Savings Plan, Social Security and other retirement-related federal benefits.
They can help you evaluate your TSP options in relation to your personal retirement goals to help ensure you’re making the right financial decision.