TSP Fund
Choices.
The TSP offers two approaches to investing: Lifecycle (L) Funds that automatically adjust your mix as retirement approaches, and five individual funds (G, F, C, S, I) you manage yourself. For most retirees who depend on their TSP, conservative allocation — especially toward the G Fund — is the safer starting point.
A retiree's dilemma —
preserve vs. grow.
In retirement the investment calculus shifts. When you were accumulating, you could ride out market downturns over time. As a retiree drawing from your account, a bad sequence of returns early in retirement can permanently damage your financial picture.
You shouldn't risk what you can't afford to lose. If you are depending on your TSP to maintain your standard of living in retirement, keeping the majority in the G Fund or L Income Fund is the prudent baseline — not because growth doesn't matter, but because a large loss near or in retirement is far more damaging than the same loss during your working years.
The G Fund is the only TSP fund guaranteed not to decrease in value. It is the no-brainer choice for money you will need in retirement within the next few years.
The F Fund (Fixed Income Index) is an alternative, but carries more risk than the G Fund: commercial bond funds tend to fall in price when interest rates rise. The G Fund avoids this interest rate risk entirely. The L Income Fund — invested approximately 75% in the G Fund with a mix of other funds to seek inflation-matching returns — is a good all-in-one option for retirees already drawing down their accounts.
The age-based allocation rule of thumb
The five individual
TSP funds.
The five individual funds cover the spectrum from zero market risk (G Fund) to international equity exposure (I Fund). You can invest in any combination — or choose an L Fund that manages the mix for you.
Invests in short-term U.S. Treasury securities. The only TSP fund guaranteed never to decrease in value. Interest rate is computed monthly. Ideal for money you will need soon or cannot afford to lose.
Tracks the Bloomberg U.S. Aggregate Bond Index. Includes government, corporate, and mortgage-backed securities. Falls in price when interest rates rise — more risk than the G Fund but potentially higher returns.
Tracks the S&P 500 index — 500 large U.S. companies. Historically the strongest long-term growth among the core TSP funds. Subject to market volatility.
Tracks the Dow Jones U.S. Completion TSM Index — small and mid-size U.S. companies not in the S&P 500. Higher growth potential and higher volatility than the C Fund.
Tracks the MSCI EAFE Index — stocks from Europe, Australasia, and the Far East. Provides international diversification with additional currency and geopolitical risk.
Don't mix L Funds and individual funds
The L Funds are already built from the five individual funds (G, F, C, S, I). If you invest simultaneously in an L Fund and one or more individual funds, you are duplicating your allocation — which defeats the purpose of the L Fund's diversification. Choose one approach: either an L Fund or a custom blend of individual funds.
The Lifecycle (L) Funds
L Funds are designed for participants who want a professionally managed, automatically adjusting portfolio without making ongoing investment decisions. You select the fund based on your "time horizon" — when you will need the money.
How L Funds automatically adjust
L Funds are rebalanced every quarter. As the target date approaches, the allocation gradually shifts from equity-heavy (C, S, I Funds) toward conservative income-preserving funds (G and F Funds). When a fund reaches its target date, it merges into the L Income Fund.
The underlying assumption is that participants with longer time horizons can afford more risk in exchange for higher potential returns. This is the same principle as the age-based rule of thumb above — the L Funds simply automate the implementation.
Mixing your own fund allocation
If you want more control than an L Fund provides, you can build your own allocation from the five individual funds — and adjust it over time.
A conservative retiree approach
For retirees who depend on their TSP for living expenses, keeping the majority (60–80%) in the G Fund and a smaller allocation in the C Fund for long-term inflation protection is a reasonable approach. The specific mix depends on your other income sources, your expenses relative to your TSP balance, and your personal risk tolerance.
Review your allocation periodically — at minimum annually. As you age and as market conditions change, what made sense at 60 may need adjustment at 70. But avoid the temptation to actively trade based on market movements; research consistently shows that reactive trading underperforms steady rebalancing.
The TSP Mutual Fund Window
The TSP now offers access to over 5,000 mutual funds through its Mutual Fund Window — significantly expanding investment options beyond the five core funds. This is appropriate for participants who are experienced investors and want to diversify beyond the standard TSP offerings. There are additional fees for mutual fund window transactions. For most retirees, the core five funds and L Income Fund provide everything needed at lower cost.
TSP fund details
& investment tools.
Official TSP fund fact sheets, historical performance, the TSP Considerations page, and investment strategy articles.