Page 111 - The Informed Fed--Hearn (edited 10.29.20)

There are ways to extend guaranteed income using TSP options if you
understand them. The risk of outliving one’s money is growing every
day. Life expectancy in the U.S. is getting longer as medical technologies
advance. When Social Security was put in place, mortality in the U.S. was
an average 63 years. Today that average lifespan is 78 and rising. Running
out of money in retirement is a real possibility. When examining the need
for guaranteed income for expenses, utilizing an annuity with a Lifetime
Income Benefit is an option to be considered. There are many highly
rated insurance companies that offer these types of income annuities.
You should consult with a licensed annuity advisor that can help you
make sense of all the options available. A good annuity advisor can put
together comparisons to determine if this type of annuity is in your best
interest and that it will satisfy your needs.

Bad Habit #6:

Balancing your TSP allocations. Studies have shown that a federal
employee who is too conservative with TSP fund allocations faces the
real possibility of running out of money in retirement. As an example, if
you could earn 6% in the TSP on $100,000, take out the interest and buy
a 3.5% COLA on the income to counteract inflation, you would run out
of TSP money in 21 years. That means if you retired at 55 you would be
without TSP income at age 76. Let’s look at it another way. If you lived
to age 85, you may have had to continue working until age 64 to save
enough TSP money to cover those extra years. Being overly aggressive
with TSP allocations can be as bad, if not worse, as being too
conservative. Trying to time the market through the C, S, I or Lifecycle
fund can be a dangerous game. No one can predict or control the stock
market. Remember 1987, 2000, 2001 and 2007? In 2008 the C fund lost
36.99%! The S fund lost 38.32%! And I fund? It lost a whopping
42.43%!! How would that effect your retirement plans if it were to repeat
itself just before you retired? These are harsh reminders of how a TSP

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