Fed Employees- Asset allocation given pension

[Anonymous]

Anonymous wrote:

Anonymous wrote:Retired and left everything as it was when I was employed. 80% C, 10% each S and I.

How much are you pulling each month?

None yet. Living off of small pension and other savings. Holding out until age 70 for Social Security.

[Anonymous]

Do you need to start pulling money as soon as you retire? Make sure you consider when you will be withdrawing and not just your retirement date if they are not the same

[Anonymous]

Anonymous wrote:Do you need to start pulling money as soon as you retire? Make sure you consider when you will be withdrawing and not just your retirement date if they are not the same

Yes, because we want to travel early in retirement. We expect about 70% of our monthly expenses to cover our basic things and the rest to cover big ticket items, repairs, gifts to kids/grandkids, and travel. This is based on current spending trends as empty nesters.

I expect our expenses will go down significantly as we age (unless we end up needing significant home care or assisted living).

[Anonymous]

I assume my pension is like a bond fund and so have my TSP 100% in stock.

[Anonymous]

I will have a solid pension that will cover most of my bills, so I am remaining aggressive in the TSP. The pension serves as the “safe” part of the portfolio. If you don’t have that, that’s why they recommend for retirees in the private sector to move assets out of the stock market.

[Anonymous]

Look at the allocation of L2040.

The life cycle funds are based on your retirement year, and they allocate the funds in a way that’s appropriate for the year of your retirement.

https://www.tsp.gov/funds-lifecycle/

[Anonymous]

100% C fund.

[Anonymous]

Anonymous wrote:Look at the allocation of L2040.

The life cycle funds are based on your retirement year, and they allocate the funds in a way that’s appropriate for the year of your retirement.

https://www.tsp.gov/funds-lifecycle/

yeah but fees are pretty high compared to CSI. i don't know if the money managers who came up with L funds factored in pension and SS in their allocations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Look at the allocation of L2040.

The life cycle funds are based on your retirement year, and they allocate the funds in a way that’s appropriate for the year of your retirement.

https://www.tsp.gov/funds-lifecycle/

yeah but fees are pretty high compared to CSI. i don't know if the money managers who came up with L funds factored in pension and SS in their allocations.

You don’t know what you are talking about. The S fund is the most expensive fund at .051%, or $51 per 100,000. The L funds basically charge a blended fee which reflects the costs of the other funds— meaning they cost between .037 and .040%.

Also the whole point of FERS retirement benefits is that they were designed as a “three legged stool” (as opposed to the CSRS stand alone pension)— annuity, TSP and SS. The idea that TSP ignored SS and FERS annuities when designing L funds is ridiculous.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Look at the allocation of L2040.

The life cycle funds are based on your retirement year, and they allocate the funds in a way that’s appropriate for the year of your retirement.

https://www.tsp.gov/funds-lifecycle/

yeah but fees are pretty high compared to CSI. i don't know if the money managers who came up with L funds factored in pension and SS in their allocations.

You don’t know what you are talking about. The S fund is the most expensive fund at .051%, or $51 per 100,000. The L funds basically charge a blended fee which reflects the costs of the other funds— meaning they cost between .037 and .040%.

Also the whole point of FERS retirement benefits is that they were designed as a “three legged stool” (as opposed to the CSRS stand alone pension)— annuity, TSP and SS. The idea that TSP ignored SS and FERS annuities when designing L funds is ridiculous.

Not really. Many of Blackrock's customers with L fund-like funds don't have pensions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Look at the allocation of L2040.

The life cycle funds are based on your retirement year, and they allocate the funds in a way that’s appropriate for the year of your retirement.

https://www.tsp.gov/funds-lifecycle/

yeah but fees are pretty high compared to CSI. i don't know if the money managers who came up with L funds factored in pension and SS in their allocations.

You don’t know what you are talking about. The S fund is the most expensive fund at .051%, or $51 per 100,000. The L funds basically charge a blended fee which reflects the costs of the other funds— meaning they cost between .037 and .040%.

Also the whole point of FERS retirement benefits is that they were designed as a “three legged stool” (as opposed to the CSRS stand alone pension)— annuity, TSP and SS. The idea that TSP ignored SS and FERS annuities when designing L funds is ridiculous.

You are correct. I stand corrected re. L fund fees. L fund used to be significantly higher (per my memory) than CSI but now I see they are comparable.

[Anonymous]

Are we still assuming we will get social security? I am also 15 years out from retirement and don't know what to assume about SS.

[Anonymous]

Anonymous wrote:Are we still assuming we will get social security? I am also 15 years out from retirement and don't know what to assume about SS.

Yes

[Anonymous]

Two ways to look at it:
1. The pension is guaranteed income, so you can take on more risk from your investments.
2. The pension is guaranteed income, so you don't need to take on more risks with your investments. You have "won the game."

Personally, considering unprecedented events in the federal government, I would probably not let my pension impact my investment decisions. I would pretend it didn't exist and invest accordingly.

[Anonymous]

Anonymous wrote:Two ways to look at it:
1. The pension is guaranteed income, so you can take on more risk from your investments.
2. The pension is guaranteed income, so you don't need to take on more risks with your investments. You have "won the game."

Personally, considering unprecedented events in the federal government, I would probably not let my pension impact my investment decisions. I would pretend it didn't exist and invest accordingly.

That is crazy— you might as well expect SS to be zeroed out.

OTOH I think the better way to think about it is to assess how much risk you are willing to take given how much you are counting on the TSP withdrawals. If they are an important part of your retirement plans then your asset allocation decision isn’t necessarily that different from anyone else’s. But if you don’t need that money at all then you have the choice of being very conservative or very aggressively or anywhere in between.