Leaving federal government, other tps like options?

Managing your TSP and alternate investment options after retirement or separation from service.

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gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Leaving federal government, other tps like options?

Post by gaijinbori »

Hello everyone, I have been reading the forum for a while yet still a bit confused.

I am planning on leaving the federal government in a few months to work in the private sector. As I will be moving to a location outside the U.S. I will have problems managing some aspects of my TSP account, along with not been able to continue making deposits.

My questions are:
1. Are there any options similar to TSP in the market for non federal government employees?
2. Are there any options similar to the advisors on this site in which I can receive a periodical email indicating how to manage my investments for a small fee?

As I will be travelling a lot and very busy I am interested in any options that let me pay a fee and provide advice in how to move my investments according to the market without having me be constantly looking at the market. I do not have the experience nor the free time to make the most effective decisions, thus why I prefer paying a more experience knowledgeable investment person.

regards,

gaijinbori

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Leaving federal government, other tps like options?

Post by crondanet5 »

Long time members have heard me say this in the past and I still stick to this concept today. The question is not how much money the private sector is dangling in front of you, the question is how soon you plan to retire, your estimated life expectancy, and what money will be available through pensions and investments to fund a successful retirement. Be sure to include in this the cost of medical insurance (I still do not understand what the affect of Obamacare will have on the cost of insurance and what coverage of medical support/service it will provide to the American citizen. This should include suppplemental medical insurance if Obamacare has a patient share cost to it). Part of the problem is I do not know if you are leaving federal service or retiring from federal service. Either way, do you qualify for a pension and will it be enough to support you when you retire? I like to assume it will cost you as much to live on in retirement as it does the month before you finally retire from working. And it is extremely important to continue to grow your assets in final retirement to meet future expenses that include an annual 4% rate of inflation on the cost to live. If you do not qualify for a federal pension and you are over age 30, you should be saving at least 40% of your gross annual salary to fund a long retired life. My model for funding retirement is based on the success of one of our former members who retired with a federal pension AND $800,000 in his real TSP account. That money, moved into a rollover 401k account and invested with at least a 10% annual return, should provide a nice lifestyle for years to come. You deserve the same, but how you finance that retirement depends on your personal situation in the years remaining before you take final retirement. I would recommend you consult a fee for service fiancial advisor to plan the funding of your future retirement. And I would seriously review the value of leaving federal service for more money in the private sector that could be offset by a few promotions resulting in a higher pension. Use the formula of multiplying the amount saved by 2% to determine how much money your nest egg would pay out annualy to support your retirement expense. Will your private sector job be subject to Social Security contributions or will your Social Security benefit be based on the contributions up to the point of leaving federal service? Lastly, I would ask you if you really want to spend so much time travelling around versus enjoying time with your family and friends? Also, do you have a will, a Living Trust, A HEPA designated agent to make medical decisions in the event of your incapacitation, and letter of intent of what to do with your remains in the event of death away from home/outside of the U.S. And, most morbidly to some readers (but so supportive to your next of kin) consider prepaying funeral arrangements. Hope this helps.

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

Thanks for the information, I will take it into account. As for retirement, I am planning on retiring in 32 years, as I move into the private sector I am looking at other investment vehicles as I wont have the liberty of continuing to use the TSP. anyone can recommend options or books to read?

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Leaving federal government, other tps like options?

Post by crondanet5 »

Roll your TSP account out of the TSP into a rollover 401k account. Find a good financial firm to manage your account to make it grow while you are unable to manage your investment. I consider the Will and other items mentioned in my previous post baby steps in your preparation for retirement. Focus on savings and expect to live in a one bedroom apartment when you retire so do not buy a bunch of things in your travels. Depending on the way Obamacare unfolds keep your eye on opening a longterm health care contract before your body becomes unhealthy. Be especially careful to choose the one with the best annual increase in benefit without an increase in premium. Now for the tough question. What makes you think your potential private contractor will want to keep you beyond age 50 when so many 50ish people are being let go? How do you plan to keep yourself employable?

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

yes, as a matter of fact i did finish 2 master degrees and I am getting hired on a senior managerial position below executive. If I maintain my skills up to date in the IT field and maintain my network I expect to stay employed. My actual reason for moving is family related, while I wont be travelling I will move to a position outside the U.S. While on the government I was putting away 20% of my paycheck on the retirement fund and expect to increase this amount as I move into the private sector. Right now I am 33 and if I continue increasing the amount saved I should be ok. I just need some one to recommend me some good financial management firms and books to read and be more informed.

crondanet5
Posts: 4330
Joined: Tue Aug 19, 2008 8:51 pm

Re: Leaving federal government, other tps like options?

Post by crondanet5 »

While somewhat elusive to locate, listen to Jill Schlesinger on http://www.moneyradio.com/ListenLive . She is extremely knowledgeable of the financial planning arena and likes ETFs.

I knew someone who read a new financial book a week and could quote it word for word. The problem is most are thin and present one investment concept that worked for the author but may not be right for you. So instead I recommend taping and viewing CNBC Fast Money and Options Action shows. You get to hear what the hedge fund managers are thinking. Only take what they say with a grain of salt and expect whatever they say to change within 48 hours. So if you own one of the stocks they talk about set a realistic sell price and pray it sellls before the selloff. Congats on the double masters. Is one of them an MBA? Do you want to join management? And do not forget the value of the Social Security pension. And talk frequently to your doctor about the markers in your blood. That is as interesting a conversation (if you learn about them so you can talk at the Master's level about them with your doctor) as discussing multiple big bangs connected with dimensional collisions. Good luck with your career and keep putting that money away. BTW, have you thought about opening a taxable brokerage account so you can develop a large pool of money to draw on while allowing your tax deferred retirement accounts the opportunity to create real wealth before you have to begin making withdrawals from them at age 70.5? I think you would look good if you were a millionaire. Hope you can make it happen.

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

thanks. yes, one of the degrees is an MBA, the other a Master of science. I have been putting money on a Roth too and some CDs.

I will have a listen to the podcast to see what other venues I can try. As for social security, I am not really counting on it as I feel it will no longer exist by 2045, if it does it will be icing on the cake.

One of my fears is the complexity of private investment options. In the TSP I have used the tspkey service and done well for a small fee. I wish there was a similar service in the private sector along with a site like tspcenter to track my progress.

BigMike
Posts: 220
Joined: Wed Sep 29, 2010 12:45 pm

Re: Leaving federal government, other tps like options?

Post by BigMike »

Gaijinbori,

Why not just leave your money in the TSP and continue to use TSPKEY? With the internet being so ubiquitous around the world that shouldn't present much of a challenge even if you are overseas and/or travelling. While you won't be able to add to your TSP there is no reason you MUST withdraw it. Leave it where it is and let it keep growing.

Just set up a nice private account with one of the mainstream brokerage houses (Fidelity is my choice). Then invest any new savings there. You should probably open at least three accounts (one tax free IRA type, one Roth type and one regular taxable). Put the maximum allowed into the Roth and regular IRA each year in equal monthly installments. Put any remaining savings each month in the regular taxable account.

As far as an investment strategy for all of the new savings I would suggest some mainstream ETF that tracks something like the S&P 500 or Wilshire 4500. (The other option would be some kind of balanced fund similar to the TSP L-funds.) Just keep putting in each month in a dollar cost averaging scenario and leave it alone as far as moving in and out of the market. You have sufficient time before retirement for this kind of buy-and-hold strategy to be very effective.

Just my opinion for what it is worth.

BigMike

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

great idea, thanks bigmike. whats your opinion on etrade?

User avatar
Relevant
Posts: 505
Joined: Thu Apr 26, 2012 1:01 pm

Re: Leaving federal government, other tps like options?

Post by Relevant »

If you like the investment choices within TSP you may want to read my white papers on 401k and IRA investing. You can roll over your TSP to a self directed IRA brokerage account on-line and use ETF's that mirror the TSP funds.

If you have any questions don't hesitate to ask.

nomny2020
Posts: 83
Joined: Mon Sep 13, 2010 10:35 am

Re: Leaving federal government, other tps like options?

Post by nomny2020 »

gaijinbori;
1. Are there any options similar to TSP in the market for non federal government employees?
There are only two things, in my opinion, that make the TSP special : the extremely low ER and the G fund. Other than that, many people find the TSP a little restrictive (limited IFTs, lack of options and a weak international fund). With that being said, I'm not sure what you mean by similar options. The F, C, and S funds can be found anywhere and much better options for the I fund are just as available. As far as being worried about "the complexity of private investment options", using Vanguard as an example, owning a combination of Total Stock Market (VTSMX) and the Total International Stock (VGTSX) more than covers the C,S and I. Throw in the Total Bound Market (VBMFX, which even includes foreign bonds for more diversity), and you have all aspects of the TSP ( except the G fund) and then some covered.

Can't help you with the second question, sounds like market timing to me. I have never seen an advisor or manager that has a proven record of beating the market. So in essence, you are paying somebody to gamble with your money based on hunches and guesses. But if you are dead set on trying to time the market and you just want a professionals opinion on what is going to happen, stick with what you know. If they recommend C or S, they are saying the market will do good. G or F, downturn and run for cover. I fund, foreign markets look good.

As for books to read, I'll have to get back to you on that. But for a different take on the recommendations already given - if you have ITunes on your computer, go to radio...news/talk radio...investoradio247. The shows are at least 3 months old but it doesn't matter. What they say makes sense whether it is 2008 or 2013. Also, take a look at the Bogleheads (as in John Bogle). Read thru the forum, do some research and then ask them for advice.

As for my recommendation... keep what you have in the TSP. Once you decide on an AA, use the G fund for your bond allocation portion. Remember, the G fund is only available in the TSP and there are people that would kill to have our access to it --- don't give that up just yet.
http://video.pbs.org/video/2365000843/
If you are 20, it will change your future.
30, watch it B4 it is too late.
40, a little late but it can't hurt.

BigMike
Posts: 220
Joined: Wed Sep 29, 2010 12:45 pm

Re: Leaving federal government, other tps like options?

Post by BigMike »

gaijinbori wrote:great idea, thanks bigmike. whats your opinion on etrade?


I must plead ignorance on that one. I have not used them so I have only what I hear third hand to go by. Most people I know have been pleased with them.

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

Excellent input everyone. Looks like I will be holding my money on the TSP for a while after I am out. I will put it on the G fund for protection while I study and learn a bit more about the market. I will also look at investing on ETFs as the tend to work better than getting a financial advisor to gamble with my money. The main goal of this investment is long term as I have other more liquid money reserves for immediate use if it happens that I need to retire before 65. For the time being I am looking at retiring at this age, but you never know what might happen in the future.

spooner4
Posts: 41
Joined: Sun Dec 25, 2011 9:17 pm

Re: Leaving federal government, other tps like options?

Post by spooner4 »

I kept my TSP been retired 9 years, value doubled in 6 years and it is still growing, I will leave in TSP. Sorry need to update.....value not doubled but tripled !!!!
Last edited by spooner4 on Thu Sep 05, 2013 4:59 am, edited 1 time in total.

gaijinbori
Posts: 11
Joined: Thu Mar 08, 2012 6:23 pm

Re: Leaving federal government, other tps like options?

Post by gaijinbori »

My main worries is doing major changes such as change of address, password resets, survivor-ship benefit changes, etc. My experience has been that I have to bring the paperwork signed to one of the HR office of the agency in which I work. I am not sure how this would work if I was living overseas as doing many HR tasks by phone tends to be a nightmare when you are not physically available to visit the office.

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Fund Prices2024-03-28

FundPriceDayYTD
G $18.15 0.05% 1.05%
F $19.08 -0.06% -0.74%
C $82.21 0.11% 10.55%
S $82.43 0.30% 6.92%
I $42.57 -0.24% 5.95%
L2065 $16.38 0.02% 8.37%
L2060 $16.39 0.02% 8.38%
L2055 $16.39 0.02% 8.38%
L2050 $32.73 0.01% 6.95%
L2045 $14.91 0.02% 6.58%
L2040 $54.38 0.02% 6.22%
L2035 $14.34 0.02% 5.79%
L2030 $47.67 0.02% 5.38%
L2025 $13.15 0.03% 3.43%
Linc $25.61 0.03% 2.82%

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