TSP Snapshot: Keep a more focused eye on your retirement

Thursday - 8/5/2010, 7:46pm EDT

WFED's Jason Miller with Ann Vanderslice, president, Retirement Planning Strategies

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By Jason Miller
Executive Editor
Federal News Radio

Federal employees too often look at their Thrift Savings Plan only once a year or less which is why now is the perfect time to revisit their investment strategies.

Ann Vanderslice president of Retirement Planning Strategies, which advises federal employees, says feds should recognize that the market's volatility affects the TSP so paying more attention is critical to their investments.

"Federal employees were lulled into complacency because the 1990s were so good and they didn't have to pay attention more than once a year because it always went up," says Vanderslice in an interview with Federal News Radio for its monthly TSP Snapshot report. "Employees now can't afford not to pay attention more often. I recommend look quarterly and asking if their strategy fits needs their needs."

But she cautions that investors shouldn't be reactionary to what happened last month or the last six.

For instance, every fund in the TSP grew in July. However the C and the I funds were down in May and June by 13 percent.

Vanderslice says S Fund grew in July by 7 percent and year-to-date by 6.15 percent, while the C Fund has struggled, growing 7 percent in July, but down 0.11 percent on the year. These two funds are just one example of the overall instability of the market. She says seven-months of returns show the changes that occur and why feds need to pay more attention.

"Investors shouldn't look in the rearview mirror at how funds have done month-to-month," Vanderslice says. "Any month can do well in any given year so I would suggest not trying to base it on what time of year it is. Federal employees should look at whether their current allocation makes sense for them, and if they are nearing retirement, look at whether their allocations fit into their retirement timeframe."

Vanderslice says year-to-date all the funds have performed about as well as expected. She points to the F Fund as a bit of surprise in terms of its return so far.

The F Fund has returned 6.53 percent through seven months of 2010. In 2009, it returned only 6 percent so it already passed last year's rate.

"The F Fund has been misaligned," Vanderslice says. "People talk about it and don't want to put money in it, and they look at the returns and say 'Why don't I put money in it?'"

She adds employees, however, should not put everything into the F Fund just because it has performed well so far this year.

"You really have to look at the averages over the last 3-5-10-years and then tweak your allocations," Vanderslice says. "You should never make wide swings because they typically will get you in trouble. Your allocations should be set so you are making small adjustments as needed."

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