Will My TSP Grow After I Retire?
Yes, your Thrift Savings Plan (TSP) can continue to grow after you retire. However, it’s important to remember that TSPs are subject to market risks. This means that while there is potential for growth, there is also a risk of market loss.
Exposure to Market Loss
Since TSPs are invested in various securities, they are exposed to the fluctuations of the market. If the market performs well, your TSP may see significant growth. Conversely, if the market performs poorly, you could experience a loss in your TSP’s value.
Rule of Thumb: Risk Versus Affordability
A general rule of thumb is that if you cannot afford to lose money, you should consider reducing your exposure to potential loss. This is particularly relevant for retirees who rely on their TSP for income and cannot afford significant fluctuations in its value.
Rolling Over TSP into an IRA Fixed-Indexed
Annuity One recommendation to mitigate risk is to roll over your TSP into an IRA fixed-indexed annuity. This move has several benefits:
- Tax Consequences: Rolling over into an IRA fixed indexed annuity can be done without immediate tax consequences.
- Growth Potential: Your investment can grow based on the performance of a stock market index.
- Protection from Stock Market Loss: A fixed-indexed annuity offers protection against stock market losses, providing a more stable investment option for your retirement funds.
In summary, your TSP can grow post-retirement, but it’s crucial to balance the potential for growth against the risk of market loss. Rolling over into an IRA fixed indexed annuity can be a viable strategy for those seeking growth with protection from market downturns. If you’re considering this option or need advice tailored to your specific situation, contact us today for a free quote.
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