TSP
Answer: More! I frequently state that there is no such thing as too much money in the Thrift Savings Plan. If you want your TSP balance to be able to generate an inflation-indexed annual income of $10,000, most financial planners will suggest that you have a $250,000 balance at the time you retire. This is based on something called the “4% rule”. Financial planners using calculators that give the odds of running out of money in 30 years (called “Monte Carlo Simulators”), have found that 90% of the scenarios generated by the calculator will result in an individual still having money remaining at the end of 30 years if they begin their withdrawals at a 4% rate and make annual inflation adjustments.
Given today’s lower rates of return on the G fund (2.04% in 2015), some have suggested that a lower rate of withdrawal would be appropriate for those who have their TSP invested solely in the G fund.
I predict that the G funds 2016 rate of return will be close to 1.8%.
Each weekwe will answer one or two questions from readers.Wewon’t be able to respond to every single question individually but we will do our best to answer the most frequent questions asked.
