Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make smarter financial decisions. Reyna Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:40] Speaker B: Well, if Bob Dylan said that the times they are a changing, he may have been talking about the L funds in the tsp. Because as time goes by, every L fund but one, ch, ch, ch changes over time.
So if you didn't know, this rain is here to tell you for the first time, the L funds, ntsb, cha cha cha change for you every single quarter. What does that mean? Rayna, what are you talking about? The L funds are funds and I picked them and it says it in my tsp. What do you mean it's changing? Well, many people had no idea that it's changing right underneath them.
It's like if you feel the earth move under your feet, you may feel the ELF fund move under your feet.
So what does this mean? If you pick an elf fund, it's connected to a date. There's a 20, 30, 35, 40, 45, 50, 55, 60. Can I hear 70? 75, 70 down front. Sold to L20 70. Just kidding. But you can pick the day you're supposed to retire. So here's an example of three. And so you can understand how it changes. So if I choose an L 2050, I am retiring in the year 2050. And I in the TSP and all of its financial gurus have determined that my result based on retiring 25 years from now should be high aggression.
High in the I fund, high in the C, high in the S, low in the G and low in the F to the point that I can almost barely see the G and the F. Right, it's there, but it's a very small pie slice. As time goes by, it will ratchet a little bit to get safer and safer as time goes by.
So in the year 2035, if I had chosen and you know, if I picked an L 2035, right now, today I'm going to be retiring only in five years.
So my aggression level needs to be a little bit less. Right? As you can see, it's going to be heavier in the G. So you see, The G is more 30 ish, almost 40% GNF. Right? Where back in, if I retire, if I'm going to retire in 2050, the G is half of 1% and the F is half of 1%. Right.
Now, fast forward, if it is now, which it is, and I retired, they would have recommended an L income. And you see how aggressive the income is. It's not, it's about 25ish percent in the CS and I. And the majority 75 plus percent is in the seat is in the GNF. Right. Because a retiree, someone retiring now, is designed to be heavily, heavily conservative. Why? Because I'm not going to be contributing any more. They're not going to be matching me anymore. So the only earnings I'm going to be getting are based on the market. And if the market has a stiff wind or something crazy happens, all I need to say are single words and you know what I mean. 2008 Covid, Ukraine tariffs. So those type of things can cause the market to swing very heavily. And most of my retirees cannot afford or stomach changes like that knowing that they're not contributing into the bucket anymore.
So if I did nothing and I picked it at 2050, fast forward as time goes by, it's going to just automatically change for me every quarter.
And then in the year 2050, it will automatically be an L income, which is what it looks like on the left. I've done nothing. I never touched it again. It automatically played stockbroker for me to get safer and safer as time goes by.
That's how the L funds work, my friends. Many people pick an L fund and they go from there. Now, some people I've seen, I look in and they have 2% in the G, 5% in the F, 2% in the C, 5% in the L, and 10% in an L 2050 and 10% in an L 2030 and 10% in NL income. There's only five funds in TSP. There are only five funds, period.
No matter how many varieties you choose, you will only effectively be in five fonts, not 10, five. And that's why many people go to the L funds on TSP and they pick the pie chart that they like and they roll with it. On your TSP statement, it's going to look as if you're only in one fund because it's one pie chart that it does not have these slices, no fractions. It doesn't show you how it is. But on your statement, to know what your current L fund reflects. You've got to go to the TSP site for the L funds and it will tell you what your current L fund looks like based on this quarter. So that one I was showing you is January of 2026 and I put it through, I put it through a image corrector and I'm saying that one of those fractions looked a little weird or had the color changed a little weird. So give me a little grace on that one. But if you go to the TSP site and you can choose the L funds and you pick the fractions that you like based on your risk acceptance and your own feeling of what the market may or may not do, you can pick it and set it and forget it. And if you looked at it four or five years later, it will automatically be more in the G, less in the CS and I than what you did before. If you have any questions on that, if you're trying to make sense of it, how the L funds work, how some of the TSP funds work, reach out. We can help with that and make some options for what your TSP may or may not be great for you. Have a wonderful rest of your day and remember the times.
[00:06:42] Speaker A: They are a changing thanks for listening to Reyna Retirement With a strong commitment to ethical standards, Reyna works hard to find the right solution for each individual or family who reaches out for advice. To contact rena directly, call 850-450-6500. That's 850-450-6500. Or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-800-872- 8857. You can also go online to americanfederal.org not affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the federal government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, agents, consultants, or any independent contractors do not provide tax, legal or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
