How to Actually Invest Your TSP in Retirement

ladies and gentlemen federal employees welcome it is great to have you today we're talking about how you actually should be investing your tsp in retirement now the reason I say actually is because I've done a number of videos on how to invest in the tsp and I've gotten lots and lots of questions about about how it actually works within the tsp because in the tsp there's lots of rules on how you can move stuff around how you can invest how you can actually Implement some of these strategies and I wanted to explain that here now if you're new here welcome it is great to have you if you're a federal employee thinking about our time trying to make the most out of your retirement you are in a great great spot I got a question from one of um you guys one of one of the viewers here um that is asking by this so I'll start here and then we'll Dive Right In they ask I have my tsp in buckets like you've talked about so before I finish the question actually um I have a number of videos on investing in buckets and how it's such a good strategy to do that sort of thing in retirement I'm gonna put a link in the description below to that video I'm going to describe it briefly here but if you want the fullest full explanation definitely check out that video okay um they continue they say hey when do I decide to start with drawing oh when I decide to start with drawing why am I not able to take from one specific bucket aka the less risky bucket or the G fund uh do I need to keep readjusting the percentage amounts as the as the withdrawn amounts come out of all the buckets okay great great question so if you didn't quite catch the question this is what this person was asking they said hey look I'm trying to do the bucket system I'm trying to have some safe money over time and some aggressive money in retirement but guess what if once I'm ready to start taking money out the tsp doesn't let me pick which fund to pull the money from it takes it proportionally what if the Market's down what if I don't want to take it from the C fund yes but my long-term bucket what if I don't want to take it from there I just want to take it from my safe bucket how do I make this working in the tsp how do I make the bucket system work in the tsp okay we're going to talk about how you can do it it's basically there's a workaround to make this still work in the tsp despite some of the rules that they have okay so before I do that I'm going to give you if you haven't seen my other video I'm going to give you a very short summary of how you should be investing your tsp in return okay this is again a very very short summary here it is number one you want some of your money to be in okay here we go I gotta get okay here rely okay you want some of your money to be in a short-term bucket meaning any money that you need in the near to mid term should be relatively safe we're talking G fund we're talking maybe some f fun those sort of funds okay so if you need money A good rule of thumb is seven to eight years okay it depends on your situation but launches for seven to eight years worth of money so if you're retiring tomorrow how much money approximately do you need from your Investments over the next seven to eight years that amount of money should be here in the gnf okay there's that everything else should be in something like a long-term bucket meaning C fund s fund maybe some iPhone that those sort of fines that are going to get you the growth over time and go check out the other video there's lots of reasons why this is a phenomenal strategy so that you have the the safety you need but also you never run out of money and you can beat in place and you can have the retirement that you want long story short there's great advantages for doing it breaking it up just like this okay now the question that this gentleman or lady sent in is basically asking hey look I've got my short-term money here I've got my long-term money here but how I mean one of the big advantages of doing this is when the long-term bucket let's say let's say this is the long-term bucket where over time it's definitely going up but in any given year it could be down it could be down when things are down we don't want to have to sell our long-term bucket to to use right because just like your house the worst time to sell a house is when you can't get very much for it right ideally you could sell your house when it's going for a ton you want to sell your house when it's up here right so that's the same thing we want to do for our long-term bucket our our C fund our s fund and it is going to go up and down but ideally we don't want to sell when things are down okay so how do we do it if the tsp is going to send money from both how do we make this happen Okay let me show you let me clear this up and let me show you okay so let's do an example let's say you have fifty dollars in the short term and fifty dollars in the long term so let's say total you have a hundred dollars in the tsp now of course this is a very simplified example but you can change this to half a million dollars in each or whatever you want okay let's say that you have fifty dollars in each now what if you told us yes behave tsp I need ten dollars okay send me ten dollars what they're gonna do is they're gonna send you five from both because they take they take the money proportionally from what funds you're in so if half your money's in the G and half is in your the C they're going to take half of it from each okay you can't pick which fund to take it from that's number one so they're going to take five from each and send it to you now okay so what is um our balance as well you have 45 now in the short term and 45 in the long term so what can we do to make it as if you only took it from the short term well what we can do is we can then move five dollars okay five dollars and move it here to the long term boom so the net result after these two transactions is you have 40 in the short term and fifty dollars in the long term which um if we remember right that's what it would have been if we took the initial ten dollars straight out of the short term so here's here's what you have to keep in mind okay here's what you have to keep in mind is that as long as you make this second transaction you you rebalance per se you move that five dollars right over to the long term as long as you do that last transaction close to as close to at the first of a draw as you can so for example if today you requested from the tsp to send you the five dollars or the ten dollars total right tomorrow you're going to want to move the the five dollars back over to the long term as long as you do it relatively close it's going to be as if you only took the money from the short-term bucket meaning you're not forced to sell the long-term bucket okay you got to just do those relatively quick so this is this is basically a workaround that works with a CSP it's one extra an admin step so it can be a little a little bit of a pain but it allows you to do this sort of thing in the tsp now some people love the flexibility of an IRA in an IRA you you basically don't have to do that second step you can choose exactly where your money comes from so there's a lot more flexibility over there there's pros and cons I've certainly I got a video tons of videos about tsp versus Ira you can definitely go check those out as well if you have any questions there's tons of resources in the description below tons tons of things to help to make sure you're maximizing all your benefits including the tsp and that you have a plan that you're comfortable confident in moving into retirement so I hope that's helpful have an incredible rest your day I'll see you guys next

Channel: Haws Federal Advisors

Views: 10,572

Keywords:

Id: QicIq6Sb15I

Length: 7min 12sec (432 seconds)

Published: Mon Feb 20 2023