Retirement & Financial Planning Report

Image: Olivier Le Moal/

Lifecycle funds are growing in popularity for retirement investing in the private sector as well as in the TSP, where now nearly half of investors have at least some of their money in one or more such funds, recent reports show.

Those funds—called the L funds in the TSP—invest in broad market indexes in differing percentages according to a target date when withdrawals are expected, becoming more conservative as that date approaches. The funds continually rebalance their investments as returns vary, in order to maintain the desired percentage allocations.


In the TSP, such funds began in 2005 with funds for 2010-2040 in 10-year increments plus an Income fund for those currently taking withdrawals, or who expect to do so soon. The 2010 and 2020 funds have since been merged into the Income fund and in 2020 new funds were started so that they are now offered in five-year increments through 2065.

The latest TSP figures show that 46 percent of account holders now have at least some money in an L fund, with 29 percent having all of their money in one or more of them. That’s in part due to policy changes in which new federal employees have investments made by default into the fund appropriate for their age, unless they make a change.

The pattern is similar in the private sector, according to data from the Employee Benefit Research Institute, which added that there are differences by age and length of employment—two factors that commonly correlate with each other.

It said that as of year-end 2018, “62 percent of 401(k) participants in their twenties held target-date funds, compared with half of 401(k) participants in their sixties” and that “among those with two or fewer years of tenure, 57 percent held target-date funds, compared with 54 percent of participants with more than five to 10 years of tenure, and 36 percent of participants with more than 30 years of tenure.”

Shocker: Social Security Tax Repayment Issue Arises

Lessons Learned Growing a TSP Balance Beyond $1M

What it Takes to Be a TSP Millionaire in Today’s Dollars

Do You Really Need to Save 10X Salary for Retirement? Not if You Have a Pension

FERS Retirement Planning Bundle: 2022 FERS Guide & TSP Handbook