Want a decent retirement? Get out of the G-Fund.

In 2015 new hires are automatically placed in the L-Fund, closets to the date of their expected retirement. But, those of us hired before 2015 were automatically placed in the G-Fund. Over the last 10 years the G-Fund, which is based on government securities has averaged 2.38% in returns over the last 10 years. Now if we assume you make $40,000 a year and you only contribute a minimum of 5% over 20 years.

G-FUND

Yearly Income	Percentage 5%	Gov’t 5% Match	Years	Total Principal	Interest Earned	Maturity Value
$40,000	$2,000	$2,000	20	$79,999.20	$22,329.93	$102,329.13
$40,000	$2,000	$2,000	25	$99,999.00	$36,463.99	$136,462.99

Now if we assume you invested in the Lifecycle fund, L-Fund 2030 which has averaged 5.85% in returns over the last 10 years. Using the same parameters of $40,000 a year and you invest 5% with a government match of 5%.

L-FUND 2030

Years	Total Principal	Interest Earned	Maturity Value
20	$79,999.20	$71,305.04	$151,304.24
25	$99,999.00	$125,737.30	$225,736.30

Now I know you can plan and invest on your own in the F, C, S and I funds and experience gains much higher than that of the Lifecycle funds but the point of this article is to get people thinking about how much money they could have at retirement. There are some people who are still sitting with their money all in the G-Fund and have never moved it.  If you are not familiar with investing and have been apprehensive about moving your money from the G-Fund the Lifecycle Fund is the next best thing. You pick the year of the fund closest to your expected retirement year. The Lifecycle fund is managed by TSP and is designed to slowly move more of your money into the G-Fund as you get closer to retirement.  So, letting TSP manage the fund for you, you will still experience gains hire than that of the G-Fund and pretty much double your money by retirement.

Is the Lifecycle fund the best way to go? Who knows, everyone is different with a variety of skill levels when it comes to investing but the point is, anything is better than having all of your money in the G-Fund.