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Invest Your TSP In Retirement
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Dude, I love your videos. I've learned so much. When I'm ready to hire a consultant, 100% I'll be contacting you.
I’ve maxed out my Roth for 2020 and am 19 currently , have my Roth through vanguard / VTSAX & VWO / VXUS.
How much do you charge for a consult ?
Great video! One minor correction: Dave recommends 80%C 10%S and 10%I. I just completed his Financial Peace University last summer and that was his updated suggestions
I've personally diversified 70/15/15. C/S/I respectively.
Do you have any videos discussing tsp investments while in a war zone? I have a chunk of money that is “tax free” in my tsp, however it is not designated as a Roth. How does this money grow and what are the tax implications later in life when withdrawing the investment. Are the gains calculated tax free also?
It is much better to put funds in the traditional TSP instead of a Roth TSP because instead of paying taxes up front (before investing in the Roth TSP), you can invest those tax dollars for many years in the Traditional TSP because the taxes are deferred, so you will have gained massive dividends and interest on those tax dollars until age 72; and that's potentially over 40 years of interest and dividends compounded (depending on how many years you work). With the Roth TSP you won't get those dividends and interest on the tax dollars because you already paid the tax dollars. I would rather gain dividends and interest on deferred tax dollars for many years in the Traditional TSP, instead of getting no investment return on tax dollars by investing in the Roth TSP.
I almost turned this video off about a minute and a half into it, now. I wish I would have.
If you follow the DR plan is a great idea to go 80/10/10. If not, consider other alternatives.
Investing in s fund now have been getting killed. How about combining the strategy with using technical charts? It works better with lower risks and higher returns.
An IRA at Fidelity, either traditional or Roth, is FAR superior to the TSP. They have 7,000 funds to choose from, not 5 core funds, and there are better choices that have LOWER fees at Fidelity. Some have ZERO fees!!
It's 2022 and the brokerage world has evolved. The TSP use to win on fees, but that hasn't been true for well more than 5 years.
Beyond having more fund choices and lower fee options, Fidelity doesn't limit inter-fund transfers. The TSP only allows 2. Although I rarely adjust my TSP holdings, there have been times when I'd like to make a gradual adjustment in 4 or 5 steps, but I can't in the TSP. There is no reason the TSP needs to limit participates to just 2 transfers a month. HOW ARCHAIC!!
There are MANY reasons IRAs, either traditional or Roth, are superior to either TSP option. The TSP use to have lower fees, but that's not true anymore and I'm tired of people continually preaching the low fee TSP mantra, as if it is still true. ITS NOT TRUE ANYMORE.
I'm a current federal employee and I put my first 5% into the TSP to get the full match. Then, I contribute to IRAs at Fidelity. And, I didn't get that idea from Dave Ramsey either.
Regarding traditional vs. Roth. Most of the so called financial experts focus too much on one's current tax rate vs. the projected tax rate in retirement. This is important, but not as important as considering the amount one can contribute pre vs post tax today … which is a factor of their current tax rate. AND, how that compounds over the years, which is largely affected by how old they currently are. Plus, this decision needs to be looked at from a broader estate planning perspective too.
The Roth is not always the best choice, but typically is for younger people who are not yet earning the big bucks. The Roth option is almost always the best option for large families (child tax credits are a huge factor), especially for single income families with kids.
Higher wage earners are typically better off contributing to the traditional and taking the tax deduction, but not always. It's a complex computation and focusing so much on current vs. retirement tax rate is a HUGE oversimplification that will usually lead to a less than ideal conclusion.
Good luck. Don't be mislead by the experts who claim the TSP is so great. I find it to be my worst option and only contribute to it for the match and to save more for retirement than IRAs allow.
The TSP, and any 401k, have higher contribution limits than IRAs do. That is one thing the TSP helps me with. That and the match are it. Everything else about the TSP is substandard.
The TSP is absolutely the worst option for a federal employee. The only reasons I put anything into the TSP is to get the 5% match, and for additional retirement savings after maxing out the IRAs for both my wife and I.
When I turn 59.5 years old, I will do a one time in service tax free withdrawal of nearly every dollar in my TSP, by doing a direct rollover to my traditional and Roth IRAs at Fidelity. I will leave a few hundred dollars in the TSP so my account remains open and so I can continue to contribute and get the 5% match until retirement. I cannot wait! Lower fees, more options, and more flexibility … to include withdrawal options in retirement. – all better with Fidelity IRAs.
Does tsp ever plan to have funds that maintain a certain allocation forever instead of getting more conservative as it gets toward target year?
Don Burke's comments are SPOT on, please read them.
READERS: It's actually a 6% contribution needed to get the 5% full federal match. Check the facts and read the literature yourself, you'll see. The regular ROTH IRA absolutely FAILS in comparison to the TSP ROTH and you know this.
Secondly, everyone wants fewer taxes after retirement. They tax the hell out of TSP distributions, 10% and upwards if you're under age 59 (a 10% penalty if you're under age 59. Talk about a kick in the gut!!)
The I fund is just awful. It's not as International as you think. Basically it's Western Europe companies and Japan. This is not an International aggressive fund. If you want to be diversified, go 100% in the C fund. This is 500 companies, how much more diversity do you want?
You always give great advice love your channel I wish you were around when I sarted.
In this market today, where should your current money that's already in the TSP be at?
Since you’ve already paid taxes on your Roth contributions, you can withdraw those tax free anytime
Regardless of your tax rate now versus in retirement, with the Roth option you never pay taxes on the interest. After decades of compounding, the interest earned should be significantly greater than the principal contributed. Avoiding tax on the earned interest far outweighs any difference in tax rate.
A few years ago, Ramsey changed his recommended mix to 80%C, 10%S, 10%I. I haven't heard him mention 60/20/20 in a long time. He also has stated the reason he recommends to continue investing in the I fund is because he had his gurus run a calculation over the longer history of the market and they found that the Internaational generally ran inverse to the US market and had kind of a little hedging affect to protect against larger loss as a result.
Dave Ramsey is a crook!
how about if you have a Citi 401k employee (very small) is it better to just transfer it to ones TSP? I've been considering the transfer due to the smaller fees on TSP
Haws, I’m 39 and maxing out my traditional TSP. I currently have around $370k in my TSP and have been recently wondering about RMDs. If things keep going well and I start withdrawing 4% at 57, I should be able to keep the future 1.8M or so in tack until death, correct? Or do minimum contributions starting at 72 essentially make sure it’s all but depleted by the time I die? Thanks.
I needed the tax break when working, after retirement, income is lower…so is tax bracket.
“C” and “S” funds are great. Why the I fund?
Dave tells people to go to an ira because his investors can't manage your money in a tsp. It's all about his commission
Ramsey is right!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Medicare Tax Premiums $500 month!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Roth IRA more choices in investments!!!!!!!!!!!!!!!!!!!!
The reason I don't invest in a Roth TSP is because I don't trust the government to change their mind and tax it anyway sometime in the future. Remember, Social Security was never supposed to be taxed and look now, up to 85%.