The Thrift Savings Plan (TSP) Lifecycle Funds, or L Funds, are designed to simplify retirement investing by automatically allocating contributions across the TSP’s five core funds: G, F, C, S, and I funds. These allocations are adjusted quarterly to balance risk and return based on how close you are to retirement. As you near your target date, the L Funds gradually shift to more conservative investments, aiming to reduce risk.
Why Choose the TSP Lifecycle Funds?
For those who prefer a hands-off approach, the Lifecycle Funds offer an “auto-pilot” solution, with some of the lowest fees available. Each L Fund is associated with a target date, which influences its asset mix, known as the target allocation. The closer the target date, the more conservative the allocation. For example, the L 2030 Fund is intended for those planning to start withdrawals near 2030. Once a target date is reached, the fund phases out, and its assets are moved to the L Income Fund.
Choosing Among the 11 Lifecycle Funds
Participants can allocate any part of their TSP account to one or more L Funds. Here’s a quick guide:
- L Income: For those already making withdrawals or born before 1960.
- L 2025: For those planning to withdraw between 2025 and 2027 or born 1960-1964.
- L 2030: For withdrawal between 2028 and 2032 or born 1965-1969.
- L 2035: For withdrawal between 2033 and 2037 or born 1970-1974.
- L 2040: For withdrawal between 2038 and 2042 or born 1975-1979.
- L 2045: For withdrawal between 2043 and 2047 or born 1980-1984.
- L 2050: For withdrawal between 2048 and 2052 or born 1985-1989.
- L 2055: For withdrawal between 2053 and 2057 or born 1990-1994.
- L 2060: For withdrawal between 2058 and 2062 or born 1995-1999.
- L 2065: For withdrawal between 2063 and 2067 or born 2000-2004.
- L 2070: For withdrawals planned for 2068 or later or those born after 2004.
For more guidance on choosing the right L Fund for your retirement strategy, consider consulting with an FRC® trained advisor.
