My $1.9 Million TSP Investment Strategy in 2023 | Financial Independence with TSP
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- Опубліковано 16 чер 2024
- The contribution limit for TSP in 2023 is $22,500 or $30,000 for 50 or older. My TSP strategy is to max out my contribution every year. How long do you think it'll take to reach 7 figures if I max out my contribution every year?
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⏰ Table of Contents ⏰
0:00 TSP Allocation Strategy
6:58 TSP Investment Strategy
#FIREPsyChat #FinancialIndependence #TSP
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Interesting. Having never worked outside the private sector, I had no idea what this was about. Thank you. I learned something this morning. I may never need it, but knowledge never hurts.
I’m currently 19 I turn 20 next month. I currently have 80% C fund, 10% S and I funds all in stock. I started by placing a chunk of my bonus into the tsp which was about $4,800 and in 7 months that money has grown into almost $17,000 and I’m surprised how fast it’s grown! Extremely happy with my results so far!
I was just in my TSP changing stuff around and did 50 / 50
Saw your video. Pretty cool you're doing the same thing.
it's like we're twins or something
I like your strategy. You don't panic. If you have a solid multi-year strategy, stick with it after a bad year. I'm not a fan of the I fund or the F fund either. Roth is a good idea if you are young and/or maxed out and could contribute more. By contributing Roth you are effectively able to contribute more in value. In other words $30k Roth is worth more to you retired than $30k traditional because the taxes are already paid. People should look at their own situation and see what makes sense but consider Roth.
Thank you for this!
Of course!
Its April, 2024. Over the years (I am 73) TSP has been an excellent financial deal for government employees. Just remember its a long term approach to help you live out the last years of your life. Other investments along with your TSP are also advisable. And while now you might think you want to retire. Many will still want to be engaged with some type of work or hobby. Have friends of different ages. Ever wonder why sooo many rich people, who are self made, continue to work well beyond retirement age? Because its fun.
Currently active and sitting on 140k in my Roth. Got about 5 years to go before retirement. I wouldn’t have to add another dollar and I’d hit 2 million at withdrawal (65 instead of 59 1/2). I’m going to keep maxing till retirement and see how big I can get it to balloon up to.
Thanks For The Info.
I agree that C&S are the ways to go. I recently changed the allocation to 80-20 C and S respectively. Key thing is to do your best to increase your contribution amount every year, especially with the salary increases. Hopefully, you can max it out as soon as possible.
Time in the market is key. Contribute early-especially at least 5% so you get the maximum match!
I agree we already work enough n majority is taking in taxes. Not mention inflation and cost of living is ridiculous. I hear u with the second job but whatever happen to just living. I guess I’ll be eating sandwiches for next 20 years n praying
Still in service @ 24 years, with everything in the C fund; planning to get a Civil Service job (reluctantly) towards the end of 2024 only so that I can continue maxing that fund for another 10 or so years. That will take me to 55. From there I will probably off ramp from "working" and focus on passive income generation (which I am also dabbling in....anticipating self sufficiency in 5 years and interest payments being sufficient in that 10 year window); however, if my passive income reaches 15k monthly at anypoint in time I'm done
Your video and videos like yours have made me think more about my TSP strategy. I think a lot about money and I think going forward I'm going to go use the TSP by going all C fund and put in $700 per paycheck equivalent to picking up 1 share of VOO each week. Of course the TSP is not my only account.
Cheering for you!
Would appreciate a vid with a strategy to roll over TSP (Roth IRA) to a personal Roth IRA once a person is ready to live off their investments. Fidelity informed me today that individuals can select their own stocks with funds rolled over from another Roth IRA like TSP once it's in the account. All tax free! I like the idea of creating a cash account and diverting the dividends too it once the cash has been reinvested into the personal Roth.
Roth TSP rollover video is on the queue. I just don’t know when it’ll be published yet but soon!
Great video, If you plan on retiring at age 45, how do you plan on addressing your health insurance coverage outside of FEHB coverage?
interesting how you received no response
Good Q as one of the other major benefits of a Fed retirement is getting to keep FEHB, but getting to retire early and loose that is not a bad option either.
Could someone elaborate this question I don’t understand it
Your videos are the best..I'm 5 years from retiring at 58 and made many mistakes over the years after my divorce...I am trying to be aggressive now......
The most important thing is to recognize the mistake. I recognized my $110k mistake and I’m not going back to it. You’ve got this and I’m cheering for your success
I had my TSP investment in the L2040 fund for more than a decade, and THAT was a very bad idea. I realized that the 15 year return on that fund was only 7.59% return rate for a 14 year period. The C fund was at 11.89% for the same time period. That's a HUGE difference. So I went with 60% for the C fund and 40% for the S fund currently. I moved all my investment there and future allocationa. I don't need my TSP for another 18 years minimum so I can handle the risk. I don't need G funds in my current situation! I didn't pay attention to those little details. Thanks to guys like you, now I know what to do exactly. Thanks!
Glad to help!
I did the same thing. Mines was in the L2040 for the past 1year in a half. I just switched to C and S fund the other day. I have 25 years before I can retire. I am concerned for inflation and recession that can happen, or, will happen.
Yes this is me I am 7 years in tsp and only have $10,000 I started at 19 I’m grateful to catch it at 26
By only making Roth TSP contributions at this point in your career, you're probably paying a lot more in taxes today than you would if you take the tax deduction with a Traditional TSP today and withdraw that money later when you're in a lower income tax bracket. If you're a GS-13/6 in the DC area, you're making around $130k, which puts you in the 22% tax bracket for MFJ after the standard deduction (assuming your spouse doesn't work, which would make living in the DC area impossible). Maxing out Traditional TSP contributions potentially drops you down to the 12% bracket and saves you thousands on your tax bill today. Let's say you want to retire early, like 50 with 25 years of service, and you have $1.0M in your Traditional TSP at that point. You separate from service, move the Traditional TSP into a Vanguard Traditional IRA and start a 72(t) distribution on it. You're getting about $60k a year from that 72(t) with no penalties (assumes fixed annuitization at 5%, joint life expectancy), just at a regular income tax rate. You take those 72(t) distributions, plus you still do some Traditional IRA-to-Roth IRA conversion ladder, plus maybe a part-time job and you're probably still close to the 12% income tax threshold with around $100k in taxable income before the standard deduction. Even at that taxable income level, you qualify for a massive premium subsidy under the ACA in the DC area so your monthly cost for health insurance is "only" about $700/month for a Silver plan. At age 59.5, you stop the 72(t) distributions and live off a combination of regular Traditional IRA distributions, the laddered Roth IRA funds that are now available with no penalty, and maybe a part-time job. At age 60, you start drawing your deferred federal pension (20+ years of service allows unreduced pension at age 60), reduce your Traditional IRA distributions by that same amount, and keep adding to and accessing the Roth ladder. You live on that income until age 67, at which point you start drawing you full Social Security payment and further reduce your Traditional IRA distributions, all the while continuing the Roth conversions to avoid a giant tax bill at your RMD age of 75.
Great info. Now I got some more tools in the toolbox.
Bro this is way too much to digest in a comment. You should make a video…
Great plan, Mike!
Gosh, I really want to understand all of this. I understand the first half which makes sense! :( sigh
hey great content! i've been maxing out my tsp for the past 3/4 years but holding it in traditional.. when would you say is a good time to convert it into Roth? Or should i just leave it in traditional until retirement age? i'm currently employed atm and earning my highest in my working career. thanks!
I don’t know when is the right time to convert to Roth because I don’t know your entire financial situation. I’m not personally converting anything until I retire but that’s just me. You may be in a higher tax bracket that might cost more to convert now versus later. Again, it depends on your entire financial picture
@ *keith r* as you're earning your highest in your career you most likely should be favoring contributing to traditional TSP. If you expect an increase in salary to bump to an even higher Federal Tax Bracket you could go Roth TSP now and go traditional TSP once you reach that next FTB. You could complement your max t-TSP with maxing out Roth IRA.
Whats your age and how long do you plan on working/contributing? If youre in your 40s or younger maybe just put 5% or whatever your match is in your traditional balance then try maxing out the roth if you can comfortably. That way when you retire youll have money you can take from traditional on a monthly basis ans youll have a nice nest egg in roth tax free that you can use for large purchases that wont mess with your tax bracket.
I op’s Roth IRA account taking out 100.00 a month . Is this good?
80% C Fund ; 10% S Fund and 10% I Fund. Most Aggressive
If I made 130k a year. I could easily max out the roth tsp, I make 54k before deductions. Guess I'll eat rice and beans and never do anything else.
You can do it, look at getting a part time job to supplement your income.
@Kim Smith 40 hrs isn't enough? I need to work 56 a week? 60?
Look at the financial situation of some elderly individuals who have nothing saved for retirement. That extra 5-10 hrs per week, or what ever you decide will benefit you in the future. You want to take advantage of compound interest. Just trying to help, at the end of the day you're an adult.
Roth is for Rich. As a CPA, I told my non rich clients to go for the tax benefits now. Basically, put most of your money into a traditional account. If you want to put some in a Roth, put enough in to pay for the tax bill, in retirement, of the tax-deferred (non-Roth / traditional) funds you contributed. Why? 2 reasons: 1) Why would you give up your tax benefits now, in your high income earning years where you have to pay the most tax just so you can not pay tax on retirement where you income is only 60% of what you make now, for the average person, and your tax is also 40% lower?…you’re basically maximizing your tax expense … paying maximum tax, for no reason. 2) For the rich, max away. But for someone of modest income… I would always have the discussion. The client would say, I only have limited funds. My financial advisor recommended investing in a Roth. I would give them their tax return and say … here’s how much tax you owe if you put money in a traditional ($) and here’s your bill if you don’t take the tax deduction and put it in a Roth ($$$), which bill do you want? People don’t realize that they’re apples and oranges. A 5,000 investment in a traditional plan is equivalent to 4,000 in a Roth. You just lost the buying power of $1,000 … because of the tax. The wealthy don’t feel that, only the average person does. The most important thing is to invest … NOT that it’s a Roth. And investing all your money in a Roth in your highest income years just doesn’t make mathematical sense anyway. It’s a scam by the govt to get people to pay more tax now, instead of paying yourself first.
@@Kep19901 it’s not a legal way to cheat taxes. Please go back and reread what I wrote and do some math on this. The main fallacy is that people think $5,000 after tax is equivalent to $5,000 before tax (e.g., tax deferred). Those are not the same things. If you earn $5,000 and then you pay 25% taxes on it…it becomes $4,000. So if i give you $5k and say don’t pay taxes now … you have $5k to invest. If I give you $5k and take out taxes before I give it to you, I’m not going to be giving you $5k. You’ll receive only $4k from me. So now someone who invested tax deferred, before tax, has an extra $1,000 to invest and compound interest that you don’t have. Now if we doing that every year for 30 years…with compound interest… so now compare 30 years of investing $4k to $5k. Compounded by the fact that, based on our current tax system, the likelihood is high that your income will decline in retirement because your income will be lower. And what you don’t withdraw continues to compound interest. So do the math in that and tell me about how you’re cheating the tax system. No sir … you’re being cheated. It just sounds like a good prize at the end, but you end up with less.
Why would you put that in a IUL to gain even more before retiring?
1.9 million will be worth 600k in 20 years with inflation. Sweet
Hi there
I have a question
I joined military in 2017 I did not changed for blended retirement b/c I did not know . Now on my LES retirement plan it says choice . what does that mean ? Should I still contribute to tsp I don’t get 5% match is it worth it . I thought to put 20 percent Roth and invest in stocks like c/s/f fonds. Any helpful tips for me thank you in advance
Contribute and plan on a 50% pension at retirement! Check in woth your installation financial advisor under MWR.
Why not simply remain invested in the most aggressive lifecycle 2070 fund, as it will automatically rebalance and diversify your portfolio for you?
May I ask, are you maximizing your contributions to whatever the max is this year? And are you basing your example on the max contribution amount ? Sorry I got lost on that part. Thanks in advance.
Yup I max it out every year
My return is over 20% this year and have been averaging around 15% for several years. Buy low/sell high strategy. I allocate my contributions 70% C, 30% G then if the somewhere in the 2cd or 3rd quarter of the year if the market is down i move my entire G balance into the C and S and buy funds at low price. Ive been getting big returns this way but do whatever works for you. Investigate all strategies
How do you buy when it is low?
@@emmyknowsbeauty810 when market is down increase your contributions
No International Exposure?
i had the chance to get in to the BRS 4-5yrs ago but i think i cant anymore. i dont have a match at all. any idea if i can still get in to the BRS or anything? im still serving but am a traditional DSG so my retirement is offset 3mo for every 90 days of AD i go on, so i think right now i have it down to age 58.
Option to join BRS ended 2017 so you remain legacy retirement and receive no 5% match.
How do i contribute to a roth in my tsp? Ive been looking for that option on the site but cant find it
If you work for the postal service
You go to postal ease
if you were a 18 year old enlisting in the military, with no money to your name at all, what would you use roth or traditional?
Roth all the way, but google your Q as there are many resources and calculators to help you decide. And if you don't make a career of the military consider getting a Fed job after you get out.
I have always stayed away from the I fund. It is a lousy investment fund.
100% C is all you need
I stopped contributing into the L-fund and started putting contributions towards C and S funds, but I am not sure if I should move the money from the L fund or leave it in there.. Any advice? I have only been in federal service since February 2022.
I can't specifically tell you what to do, but I encourage you to understand how those L Funds allocate stocks and bonds. I did a several video on that here ua-cam.com/video/OJRlVHftqwY/v-deo.html
@@FIREPsyChat I appreciate the reply, i am definitely going to watch it right now. Thank you for your help.
Still going with a 50/50 C and S split? Curious if you’ve stick w that given how S has fared so far this year
Yes, apparently he is. See @0:4:30, C/S, 50/50.
Not sure what's going on with UA-cam comment notifications but I should've replied to this. Yes, I'm still 50/50 contributions but C is outweighing S, so I'm going to reassess in a few months to figure out my allocation strategy.
Are you investing in real estate? If yes, what are you doing? I’d like to see a video on that.
Investment properties? Not at the moment but I will in the future
I'm hoping to retire in three years, at age 65. I have my TSP allocation CSI...was wondering about G fund going into the home stretch....
G fund is a safer fund but doesn’t give you much if any money, BUT the g fund never has lost money
@@blazingxflame so should I stay with CSI or go C 60% G 40%
@@dalecurtis5660 i will start by saying I’m not an expert in finances, but if your retirement is big enough, just allocate more into G 60-40 like you said.
The C fund lost a lot of money last year, it should be rising steadily from this year out. But the G fund is always steady, so it’s a safe bet. Better to slightly make money than to lose a lot of it
@@blazingxflame Thank you and I have about $24k in the account been only working for the Feds for 4 years...
@@dalecurtis5660 you need to ask yourself if you need the money? why not leave it CSI and start to draw from it in you mid 70s. 24k from an investment account isnt really going to afford you anything more than around $80 a month if you were withdrawl 4% a year starting now, if you waited 10 years at 10% interest with no additional contributions, you would end up with around $62,000 at age 75. 4% withdraw rate then would pay you $206 a month. The choice is yours.
How can I get your free info and chart tools?
You can get your free spreadsheets at www.firepsychat.com/contact
You didn't mention the benefits of going with a ROTH TSP vs a traditional TSP...Which one makes sense for you if you have the two options?
Are you in relatively low or high tax bracket?
@@alrocky 22%
@@darrellq6954 If your career path typically takes you to 24% 32% or higher tax bracket favor Roth TSP now and traditional TSP when you reach those higher tax brackets. If you ever drop to 12% FTB favor Roth TSP. If unsure as default consider traditional TSP and $7,000 Roth IRA. In any case strive to contribute as much your income and budget allows and reach max contribution $23,000 to TSP as soon as possible.
So I just realized I am not really utilizing or diversifying my tsp. I have about 6k now n I’m 33 and it’s all been going into the L fund.What advice do you have on where I should diversify my funds to
In no way am I even close to an expert or even well versed. I've only been in tsp for less than a year. However my advice would be to get out of the L funds all together. The channel "Jake Broe" has a bunch of tsp videos and even a video specifically why the L funds are a bad idea. Generally you should have 50-90% of your tsp split up in the C S and I funds, with the rest being in the G and F fund
Endeavor to increase your contribution as much as you income and budget allows, aiming to reach $20,500 asap.
I can't tell you what to do, nor should any UA-camr lol but I can tell you that I've never been a fan of the L Fund because of how to allocate their funds. I did a breakdown video on that ua-cam.com/video/OJRlVHftqwY/v-deo.html
I have all my money in the G fund should I move some around you think
IMO skip the L funds, from the day you start a Fed job in your 20s to maybe 3-5yrs out from retirement, all $$$ should be in the C or S fund, ride the ups and downs, don't panic. And max out as soon as you can and at 50 do catch up contributions if you can.
I am relatively new to tsp and was elected into a 2050 lifecycle fund, I really need to maximize my investments because I honestly don’t think I can hold out that long😂
I’ve been investing in the TSP for over 12 years now. 65/30/5 (C/S/I) split. And max it out. Forget about it. Thank me in 25/30 years.
Just max out and leave it alone.
Max out as much as you can every year and put in all C or some part in S too and let it ride for 30yrs, don't make changes when the market dips.
Hi! First timer here and 1yr in govt job and TSP. Any suggestions for a 55yr old? Any assistance will be appreciated. Thanks in advance!!
Contribute as money as your income and budget allows with minimum 5% to receive 5% GOV match and as soon as you can reach max contribution of $30,500 year. C Fund as your core or majority holding.
S and C fund not doing good under Sniffy!
C fund 9.32% last 3 yrs... would be more if Sniffy wasn't getting in the way.
Can you invest in tsp after you leave military service?
No you can't unless you become a federal civilian employee
Is 30./.in the s fund a good investment
How do you feel about it? What's in the S Fund do you think will perform well with a 30% allocation?
I have;
60% C fund
20% S fund
20% I fund
🤷🏻♀️
I am federal civilian employee first i invested L2040 the loss is greater than earn then i invest C 80% and S 20% same thing still i am lossing money than i transfer my investment 100% to G fund let’s see how it goes
You probably should've stayed in the L2040 because you do not want to mess out on the rebound.
@@bobbytatum84 so it is pretty good G fund i am glad i did transfer my money to G funds
Suggest you read more on investing and historical return trends of the markets. You've not "lost" anything until you sell, put your money in the TSP every month and ride the ups n downs for 30 yrs and you'll have a great retirement nest egg.
Honestly, financial stuff goes mostly right over my head. I need someone to tell me what each fund is, why I would want to invest in each, how much to invest in each to achieve my goals. I want to maximize my investments, but I don't really care about the details.
I hear ya man and I gotta say I had the same thought until I learned a lesson that my investment was in the wrong fund for years making a minimal return because of my unwillingness to learn. I care about the details now because I can’t ever go back in time to correct my past mistakes
She's "lucky" to be a TSP Millionaire. All she did was ride an unprecedented C Fund wave that lasted 10 years until last year when it tanked. Her TSP is also still way too exposed to volatile stocks in retirement.
TSP C fund 10 yr return 11.71% ... return since 1990 10.41% lucky or smart?
I lost about 8 k with TSP mistakes doing a percent rather than overall dollar amount.
Like you missed out on 8k in contribution?
@@FIREPsyChat yeah I was maxing out my TSP by Sept each year so would not get matching Oct, Nov, and Dec. this was missed for 5 years. One took the max and divided it by 26 it took me 12 months to max instead of nine months.
Yiiiikes but now you know
@@FIREPsyChat
So how does a mixture between G fund and C fund and sound?
How and why if you maxed out your TSP ...that they wouldn't give you the 5% match for the last 3 months of the year???..I don't understand
I lost 20k in just one day back in February in the TSP.
You don’t lose it until you sell
@@FIREPsyChat I did sell that was the problem.
@@timjoseph887 why would you sell?
Bro didnt answer anybodys question.
No way the C fund has returned 10% a year. That's a dream rate, anyone can be a millionaire at that rate. It's closer to 6%.
Im looking at 12.5% annualized return in the last 10 years.
@@FIREPsyChat that’s really good. Including the last years decline? Are you C and S?
????????????????????????????????????
@@bigblue3568 lol
Never would keep that much money in the TSP, which has an awful web site and terrible customer "service". I do business with a number of different financial firms, and the TSP is by far the worst except that its expenses are low.
Sorry but just because the website is "awful" and bad customer service does not seem like a reason to not keep money in the TSP, and an active Fed has no choice.
I work for usps we don’t get a match on are Roth TSP ! Only a 5% match on traditional TSP
The employer contribution in the TSP as of right now is going to the Traditional portion of your TSP. If you contribute 5% Roth, you get 5% traditional. If you contribute 5% traditional, you get 5% traditional. Just because you work at the USPS, it doesn’t mean the TSP rules are different. The match works the same unless you’re a military member under the legacy retirement system.
tapping into your tsp at 45 would be a finacial disaster LOL i cannot believe sit there and say from a 125K balance you would pull 45k.......great tips. Youd be back working in 2 years.
When did I say I’m pulling 45k from a 125k balance?
@@FIREPsyChat He said it would be a "finacial" disaster. That's all you need to know.