My $1.9 Million TSP Investment Strategy in 2023 | Financial Independence with TSP

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Interesting. Having never worked outside the private sector, I had no idea what this was about. Thank you. I learned something this morning. I may never need it, but knowledge never hurts.

I’m currently 19 I turn 20 next month. I currently have 80% C fund, 10% S and I funds all in stock. I started by placing a chunk of my bonus into the tsp which was about $4,800 and in 7 months that money has grown into almost $17,000 and I’m surprised how fast it’s grown! Extremely happy with my results so far!

I agree that C&S are the ways to go. I recently changed the allocation to 80-20 C and S respectively. Key thing is to do your best to increase your contribution amount every year, especially with the salary increases. Hopefully, you can max it out as soon as possible. Time in the market is key. Contribute early-especially at least 5% so you get the maximum match!

I was just in my TSP changing stuff around and did 50 / 50 Saw your video. Pretty cool you're doing the same thing.

I like your strategy. You don't panic. If you have a solid multi-year strategy, stick with it after a bad year. I'm not a fan of the I fund or the F fund either. Roth is a good idea if you are young and/or maxed out and could contribute more. By contributing Roth you are effectively able to contribute more in value. In other words $30k Roth is worth more to you retired than $30k traditional because the taxes are already paid. People should look at their own situation and see what makes sense but consider Roth.

Its April, 2024. Over the years (I am 73) TSP has been an excellent financial deal for government employees. Just remember its a long term approach to help you live out the last years of your life. Other investments along with your TSP are also advisable. And while now you might think you want to retire. Many will still want to be engaged with some type of work or hobby. Have friends of different ages. Ever wonder why sooo many rich people, who are self made, continue to work well beyond retirement age? Because its fun.

Thanks For The Info.

Thank you for this!

By only making Roth TSP contributions at this point in your career, you're probably paying a lot more in taxes today than you would if you take the tax deduction with a Traditional TSP today and withdraw that money later when you're in a lower income tax bracket. If you're a GS-13/6 in the DC area, you're making around $130k, which puts you in the 22% tax bracket for MFJ after the standard deduction (assuming your spouse doesn't work, which would make living in the DC area impossible). Maxing out Traditional TSP contributions potentially drops you down to the 12% bracket and saves you thousands on your tax bill today. Let's say you want to retire early, like 50 with 25 years of service, and you have $1.0M in your Traditional TSP at that point. You separate from service, move the Traditional TSP into a Vanguard Traditional IRA and start a 72(t) distribution on it. You're getting about $60k a year from that 72(t) with no penalties (assumes fixed annuitization at 5%, joint life expectancy), just at a regular income tax rate. You take those 72(t) distributions, plus you still do some Traditional IRA-to-Roth IRA conversion ladder, plus maybe a part-time job and you're probably still close to the 12% income tax threshold with around $100k in taxable income before the standard deduction. Even at that taxable income level, you qualify for a massive premium subsidy under the ACA in the DC area so your monthly cost for health insurance is "only" about $700/month for a Silver plan. At age 59.5, you stop the 72(t) distributions and live off a combination of regular Traditional IRA distributions, the laddered Roth IRA funds that are now available with no penalty, and maybe a part-time job. At age 60, you start drawing your deferred federal pension (20+ years of service allows unreduced pension at age 60), reduce your Traditional IRA distributions by that same amount, and keep adding to and accessing the Roth ladder. You live on that income until age 67, at which point you start drawing you full Social Security payment and further reduce your Traditional IRA distributions, all the while continuing the Roth conversions to avoid a giant tax bill at your RMD age of 75.

You didn't mention the benefits of going with a ROTH TSP vs a traditional TSP...Which one makes sense for you if you have the two options?

Great video, If you plan on retiring at age 45, how do you plan on addressing your health insurance coverage outside of FEHB coverage?

1.9 million will be worth 600k in 20 years with inflation. Sweet

Would appreciate a vid with a strategy to roll over TSP (Roth IRA) to a personal Roth IRA once a person is ready to live off their investments. Fidelity informed me today that individuals can select their own stocks with funds rolled over from another Roth IRA like TSP once it's in the account. All tax free! I like the idea of creating a cash account and diverting the dividends too it once the cash has been reinvested into the personal Roth.

I agree we already work enough n majority is taking in taxes. Not mention inflation and cost of living is ridiculous. I hear u with the second job but whatever happen to just living. I guess I’ll be eating sandwiches for next 20 years n praying

i had the chance to get in to the BRS 4-5yrs ago but i think i cant anymore. i dont have a match at all. any idea if i can still get in to the BRS or anything? im still serving but am a traditional DSG so my retirement is offset 3mo for every 90 days of AD i go on, so i think right now i have it down to age 58.

Still in service @ 24 years, with everything in the C fund; planning to get a Civil Service job (reluctantly) towards the end of 2024 only so that I can continue maxing that fund for another 10 or so years. That will take me to 55. From there I will probably off ramp from "working" and focus on passive income generation (which I am also dabbling in....anticipating self sufficiency in 5 years and interest payments being sufficient in that 10 year window); however, if my passive income reaches 15k monthly at anypoint in time I'm done

Your videos are the best..I'm 5 years from retiring at 58 and made many mistakes over the years after my divorce...I am trying to be aggressive now......

I had my TSP investment in the L2040 fund for more than a decade, and THAT was a very bad idea. I realized that the 15 year return on that fund was only 7.59% return rate for a 14 year period. The C fund was at 11.89% for the same time period. That's a HUGE difference. So I went with 60% for the C fund and 40% for the S fund currently. I moved all my investment there and future allocationa. I don't need my TSP for another 18 years minimum so I can handle the risk. I don't need G funds in my current situation! I didn't pay attention to those little details. Thanks to guys like you, now I know what to do exactly. Thanks!

If I made 130k a year. I could easily max out the roth tsp, I make 54k before deductions. Guess I'll eat rice and beans and never do anything else.