By Mike Miles
April 5th, 2013 | Uncategorized
Q. Should I keep my money in the Thrift Savings Plan after I retire or put it in an IRA? What would be best to make the most interest?
A. Stick with the TSP. You can’t beat the G Fund for risk-free interest.
April 6th, 2013 at 1:30 am
I would look into an IRA. You will have more flexibility into the types of investments you can make unlike TSP which is managed by a British institution, Barclays. With more option you can still protect your money but make more dynamic investment changes depending upon whom you move the money to.
April 6th, 2013 at 11:12 pm
As someone who is eligible to retire, I have weighed the TSP VS IRA conundrum. While I agree that the G fund is hard to beat in terms of cost and safe returns, it is not without risk. On two occasions the Federal Government has borrowed/robbed funds from the G fund to meet debt ceiling overruns. If any one thinks this will never happen again, think about the current pile of IOUs in the Social Security Fund. The second problem is that the current interest rate paid to those funds invested in the G fund do not even cover inflation. Roll your TSP funds into your IRA the minute you can after retirement. I am earning multiples of the yearly gains in my existing IRA over what I am making in interest in my current TSP G fund account.
April 8th, 2013 at 12:38 pm
If all you are concerned about is interest and fees, then the short answer provided covers it.
That said you may want to also consider options with respect to withdrawing the money, how you may need it, the fact that congress raids the G fund periodically to pay bills (I know, only “their” portion), considerations for inheritance, etc.
Also it doesn’t have to be an all or nothing consideration. You could move some to an IRA and leave some in TSP. Plenty of options.
C. Day Says:
April 16th, 2013 at 12:43 pm
I have a couple of problems with this answer. First, the G fund is paying, like all relatively low risk investments, a very low rate of return at this time. If you must have as near to zero principal risk as possible, then this may be for you, but there are other options, notably, with the TSP, the Lifecycle Income Fund.
Second, if you want more control over your investments (for example, you want to buy stocks of particular companies) then an IRA rollover is a reasonable way to go.
There is no single right answer for everyone. It depends on your financial circumstances, age at retirement, and plans for the future.
USPS Letter Carrier Says:
May 7th, 2013 at 9:07 pm
If you have to ask which (IRA or TSP) is better “to make the most interest” then you don’t know which mutual funds to invest in if an IRA is the better option.
Sure as Johnny states: “You will have more flexibility into the types of investments” with an IRA but who are YOU going to rely on for the information on which mutual funds, stocks, ETFs et al is right for you?
The fears of the government ‘robbing’ the G Fund is overblown as the money as been returned. Remember that all members of government have access to the TSP. Do you really think they are going to rob themselves?