Should I keep contributing to TSP?

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mrwawa
Posts: 36
Joined: Sun Mar 13, 2016 12:39 pm

Should I keep contributing to TSP?

Post by mrwawa »

Hi all,

I am wondering if it makes sense to keep contributing the max to TSP. I am around 7 years out and have been talking with a financial planner about the long term. I feel like TSP was good for the growth period, but is somewhat limited when wanting to diversify. Just wondering what everyone's thoughts are.

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Scarfinger
Posts: 853
Joined: Mon Jan 30, 2012 12:00 am

Re: Should I keep contributing to TSP?

Post by Scarfinger »

Basic strategy: I would put at least 5% in the TSP to get the match, then max out a Roth IRA at fidelity, Vanguard, or Schwab. Then try to max out the TSP.

So in your case, I would cut back on the TSP so that you can max out a Roth IRA at one of the above mentioned Brokerages. This will start your 5 year Roth waiting period count down so that if you do Conversions after retirement you will have met that 5 year period. Plus you can diversify with your Roth account by adding value funds, REITS, gold or whatever you need to diversify.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Balanced allocation but using Jahbulon's for guidance
Benchmark: L-2035 Fund

Bubba
Posts: 552
Joined: Thu Mar 05, 2020 3:40 am

Re: Should I keep contributing to TSP?

Post by Bubba »

mrwawa wrote: Tue Jan 14, 2025 7:14 pm Hi all,

I am wondering if it makes sense to keep contributing the max to TSP. I am around 7 years out and have been talking with a financial planner about the long term. I feel like TSP was good for the growth period, but is somewhat limited when wanting to diversify. Just wondering what everyone's thoughts are.
Without knowing your retirement age (57 or 62??) I'm going to throw out there a couple of pointers:

-The TSP has a rule where you can withdraw your money after 59 (https://www.tsp.gov/in-service-withdraw ... and-terms/). I'm going to assume that's not your plan.
-I would suggest to follow the thinking mentioned by Scarfinger, but i would add that beefing up your TSP is not a bad plan. I know that many don't like the MFW (it's expensive!), but you can access virtually every mutual fund in the book. You can also use leveraged funds, which I do.
-I would also suggest to throw in the catch up allowance too. Again, depending on your situation (e.g. does your spouse work?), having the extra cash to go through retirement is very, very helpful later on. Also, we've been discussing different strategies of drawing out your money. I would suggest you scour them a bit to see what you find.
-Ultimately, by contributing more to the TSP (at least in the traditional), you can lower your taxes now. Not bad if you don't have big bills to pay.

As a side note, I am expecting things to go awry in the market for the next few years, so make sure you use TSPCalc or some system to protect yourself.

Good luck!

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mjedlin66
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Joined: Wed Oct 02, 2013 7:51 pm

Re: Should I keep contributing to TSP?

Post by mjedlin66 »

Be wary of unscrupulous "financial planners". The biggest question to ask is how is the "financial planner" paid?

If you pay a fee to meet with them, that's a good sign. If they charge no meeting fee, but instead reap 3% annually of whatever product they are trying to sell you, then consider their motivation.
Owner/creator of TSPcalc.com - "Know your numbers"

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Scarfinger
Posts: 853
Joined: Mon Jan 30, 2012 12:00 am

Re: Should I keep contributing to TSP?

Post by Scarfinger »

mjedlin66 wrote: Wed Jan 15, 2025 10:12 am Be wary of unscrupulous "financial planners". The biggest question to ask is how is the "financial planner" paid?

If you pay a fee to meet with them, that's a good sign. If they charge no meeting fee, but instead reap 3% annually of whatever product they are trying to sell you, then consider their motivation.
Ditto!! I asked a recent retiree who transferred all her money to one of the Financial planners she found from a brochure in her break room. I asked her... How much are you paying them to manage your money? She said..."I have no idea".

One of the easiest ways to increased your portfolio is to decrease your cost/fees. The TSP has low fees, but maybe not the cheapest anymore. But still... lower fees than most. Except for the MFW, I believe that is still more expensive than it needs to be.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Balanced allocation but using Jahbulon's for guidance
Benchmark: L-2035 Fund

Bubba
Posts: 552
Joined: Thu Mar 05, 2020 3:40 am

Re: Should I keep contributing to TSP?

Post by Bubba »

Scarfinger wrote: Wed Jan 15, 2025 11:31 am
mjedlin66 wrote: Wed Jan 15, 2025 10:12 am Be wary of unscrupulous "financial planners". The biggest question to ask is how is the "financial planner" paid?

If you pay a fee to meet with them, that's a good sign. If they charge no meeting fee, but instead reap 3% annually of whatever product they are trying to sell you, then consider their motivation.
Ditto!! I asked a recent retiree who transferred all her money to one of the Financial planners she found from a brochure in her break room. I asked her... How much are you paying them to manage your money? She said..."I have no idea".

One of the easiest ways to increased your portfolio is to decrease your cost/fees. The TSP has low fees, but maybe not the cheapest anymore. But still... lower fees than most. Except for the MFW, I believe that is still more expensive than it needs to be.
Yeah, the MFW is a bit of a sore point. Having said that, the leveraged options are really, really good. Sadly there is a lot of turbulence in the market right now making even those a pit painful at times. :(

mrwawa
Posts: 36
Joined: Sun Mar 13, 2016 12:39 pm

Re: Should I keep contributing to TSP?

Post by mrwawa »

Thanks all. I am actually maxed out both in my TSP and Roth after following ppls advice here. my wife is invested with this tax advisor, so I may hold off until I see how he does in terms of returns. I'm doing okay with TSP thanks to you all, but a little worried about the next few years

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bloobs
Posts: 1699
Joined: Tue May 21, 2019 8:00 pm

Re: Should I keep contributing to TSP?

Post by bloobs »

mrwawa wrote: Thu Jan 16, 2025 8:32 am Thanks all. I am actually maxed out both in my TSP and Roth after following ppls advice here. my wife is invested with this tax advisor, so I may hold off until I see how he does in terms of returns. I'm doing okay with TSP thanks to you all, but a little worried about the next few years
Bottom line for me is I would hire only a fiduciary advisor https://www.investopedia.com/terms/f/fiduciary.asp

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evilanne
Posts: 2107
Joined: Thu May 14, 2015 6:52 pm

Re: Should I keep contributing to TSP?

Post by evilanne »

mrwawa wrote: Thu Jan 16, 2025 8:32 am Thanks all. I am actually maxed out both in my TSP and Roth after following ppls advice here. my wife is invested with this tax advisor, so I may hold off until I see how he does in terms of returns. I'm doing okay with TSP thanks to you all, but a little worried about the next few years
You may want to consider investing some money in regular brokerage account where you have easy access and don't have to worry about RMDs. Beneficiaries get a stepped up value in basis if something happens to you and long term capital gains are taxed at lower rates than income.

Bubba823
Posts: 39
Joined: Wed Aug 23, 2017 8:16 am

Re: Should I keep contributing to TSP?

Post by Bubba823 »

mrwawa wrote: Tue Jan 14, 2025 7:14 pm Hi all,

I am wondering if it makes sense to keep contributing the max to TSP. I am around 7 years out and have been talking with a financial planner about the long term. I feel like TSP was good for the growth period, but is somewhat limited when wanting to diversify. Just wondering what everyone's thoughts are.
“Diversification is protection against ignorance. It makes little sense if you know what you are doing”

- Warren Buffett

User avatar
Scarfinger
Posts: 853
Joined: Mon Jan 30, 2012 12:00 am

Re: Should I keep contributing to TSP?

Post by Scarfinger »

Bubba823 wrote: Tue Jan 21, 2025 10:41 pm
mrwawa wrote: Tue Jan 14, 2025 7:14 pm Hi all,

I am wondering if it makes sense to keep contributing the max to TSP. I am around 7 years out and have been talking with a financial planner about the long term. I feel like TSP was good for the growth period, but is somewhat limited when wanting to diversify. Just wondering what everyone's thoughts are.
“Diversification is protection against ignorance. It makes little sense if you know what you are doing”

- Warren Buffett
And most people are ignorant when it comes to the stock market. Reference the Spiva report active vs passive managers. Assuming? active managers are suppose to be experts.
While no two SPIVA Scorecards are exactly the same, certain themes have emerged over time. One is that actively managed funds have historically tended to underperform their benchmarks over short- and long-term periods. This has tended to hold true (with exceptions) across countries and regions. Another recurring theme is that even when a majority of actively managed funds in a category have outperformed the benchmark over one time period, they have usually failed to outperform over multiple periods.
I am just an average Joe. I have no clue to what the market will do.
TimboSlice wrote: "People really need to stop overthinking this."
Balanced allocation but using Jahbulon's for guidance
Benchmark: L-2035 Fund

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