What's the End Game?

[Regularguy]

I am very close to retirement at age 56. I have been using a seasonal monthly strategy last ten years or so in which I was in equities approx. 60% of the time. I am now considering keeping 40% in G always and 60% in equities seasonally. Kind of still in the market 60% percent of the time with less exposer, LOL.
My thinking is to be able to still have gains to live on and a portion to cost average if a major down turn occurs.
Should I be more conservative than that at retirement age?
Anyone else? What is your retirement strategy?

I see Evilanne's mix is currently a conservative approach. Will you add more in equities before the end of the year?

[rcozby]

My thinking is to be able to still have gains to live on and a portion to cost average if a major down turn occurs.
Should I be more conservative than that at retirement age?
Anyone else? What is your retirement strategy?

I've been retired and living well off of TSP for almost two years (I'm 57). In my view, a key factor in determining how to treat your TSP in retirement is to look at your RMDs, i.e. the amount you MUST withdraw from your TSP after you turn age 71. TSP.gov provides a brochure that discusses this, to include the IRS table that you can use to calculate the percentage of your account that you'll need to withdraw each year. Ideally, you don't want this amount to bump you up to the next higher tax bracket, otherwise you're just giving more of your money to Uncle.

Once you've figured out how low your TSP account needs to be in order to ensure tax stability at that time, you can compare that to what you have presently and then have a pretty good idea of how much you can withdraw between retiring and turning 71. At that point, you have some forks in the road:

1. If what you have is more than what you need, the excess is "play money" and you can have fun with seasonals or any other strategy. Just make sure you don't gamble more than the excess amount.

2. If what you have matches what you need, then you really ought to keep it all in the G fund.

3. If what you have is less than what you need, keep working until that gap gets closed. It's ok to live off your principal, but it is NOT ok to bet your life on future gains. In retirement, you can't contribute more to backfill your losses and it takes 2% in gains of make up for 1% in losses. And the pain of losing the money you have in hand greatly exceeds the pain of gains you might have missed.


A personal perspective; hope it helps.

[head]

Excellent reply rcozby. I have been retired since December 2016 and have been 100% in equities. I plan to move some monies to the G fund once the economy starts to stutter, which I presume will be in 2019.

[TSPBuilder]

I am very close to retirement at age 56. I have been using a seasonal monthly strategy last ten years or so in which I was in equities approx. 60% of the time. I am now considering keeping 40% in G always and 60% in equities seasonally. Kind of still in the market 60% percent of the time with less exposer, LOL.
My thinking is to be able to still have gains to live on and a portion to cost average if a major down turn occurs.
Should I be more conservative than that at retirement age?
Anyone else? What is your retirement strategy?

I see Evilanne's mix is currently a conservative approach. Will you add more in equities before the end of the year?

Retired a year ago at 56. Haven't touched TSP yet but I'm within a month of having three-quarters of it transferred to ProFunds to actively invest whether the market is up or down and make money. Going to start taking a draw from the remaining TSP balance for the next 2.5 years until I'm 59.5 and can start tapping those Roth IRA's I'm creating now to hopefully have federal tax free dividends from by then. Thinking of getting a South Dakota residency to eliminate state tax.

Do you have some saving to tide you over until you get your finalized pension. First check was 1.5 months arriving. it was a partial for about $1100/month. Final showed up about month 5 for about $2850. If you don't have complication like a divorce decree you might get it by month 3. I think I got the back compensation for the partial months after finalization.

Good Luck!

[DaveWine]

You have been in seasonals the last 10 years? what have your returns been like. I am considering trying it over buy and hold, but I am not sure what the returns are like. If you could give me some examples of some of the annual returns you received.

Thank you,

DW

[Regularguy]

In my opinion its tough to beat buy and hold, Unless you are a person who studies and understands economics very well. My returns averaged approx. 11% per year if you look at my trading on this site which mimics what I do in my real TSP. I started a monthly seasonal strategy's to try and limit exposer to equities markets and avoid major down turns. I kind of looked at it as Buy and Hold 60% of the time. I feel the biggest advantage is contribute the most you possibly can, the max if possible. That has the most benefits, like income tax benefits, compounding etc.

[Regularguy]

Thank You rcozby. Very informative. By the amount of response's it appears there are more younger persons than persons close to retirement.

[Aitrus]

I'm curious, RG. Did you initially establish a seasonal pattern and just stuck with it? Or did it change as time passed? And what pattern did you find worked the best for you? Did it look similar to anything I post about?

Congrats on the results.

[Regularguy]

Thanks for the interest Aitrus. The pattern I most rely on is the JAHBULON'S BASIC MIX, WITH SOME TWEAKS . I have read your Musings on seasonal's carefully over the years. I have learned a great deal from them and a very big Thank You for that. It's what started me to become more active in my TSP. I used that information as a strong guide line and I try my very best not to deviate. However if the equities have a drop just before a move to F or G I tend to stay a day or so longer. Your writings and efforts gave me a great jumping off point to make observations and decisions. Thank You !

[evilanne]

I actually increased C-Fund slightly today, 2nd IFT so I can only rebalance or reduce the rest of this month. Another view http://www.tspallocation.com/faq/#number4

[Regularguy]

Very good information Evilanne...as always.

[ProduceMan]

Evilanne, “increased C-Fund slightly today, 2nd IFT”, what was your first IFT?

[evilanne]

I messed up...should have waited a few days more for last IFT. Made IFT on 1st and 9th. Grrrr