How Federal Retirees Can Stay Confident in Any Economy

Market downturns will always come.

You can’t predict when, how deep, or what causes them — but that’s not what separates anxious retirees from confident ones.

The real difference comes down to one thing: having a clear plan that works in both good times and bad.

If your TSP strategy is built on a solid foundation, you won’t have to rely on guesswork, gut feelings, or emotional reactions.

Here are four essential steps to building lasting confidence in your retirement.

1. Create a Written Investment Policy Statement (IPS)

Think of your IPS as your personal retirement playbook — a one-page document that outlines:

• Your TSP fund allocation

• How often you'll rebalance

• Your plan for handling market volatility

• And your overall investment goals

This doesn’t have to be complicated. A few clear sentences can protect you from emotional decision-making.

📝 Example:

“I will rebalance every June and December. I will maintain 40% in G and F for short-term safety, and 60% in C, S, and I for long-term growth. I will not move my entire balance into the G Fund during a downturn.”

Your IPS keeps you focused when emotions run high because you’ve already made the hard decisions in advance.

2. Coordinate All Income Sources

A confident retirement doesn’t rely on just one account. It draws from multiple income layers that support each other.

Start by building a monthly retirement budget around three pillars:

• FERS pension – your steady, baseline income

• Social Security – typically starts between age 62 and 70

• TSP withdrawals – flexible and investment-driven

Knowing your pension covers your core living expenses reduces pressure to protect every dollar in your TSP. This frees you to use the TSP strategically, rather than emotionally, during downturns.

3. Use a Withdrawal Framework

Instead of guessing how much to withdraw each year, use a structured method that adapts with the market.

Two well-tested approaches:

• Bucket Strategy: Keep 1–3 years of planned withdrawals in the G or F Fund. Draw from this “Safety Bucket” during downturns, and replenish it after good years. This prevents you from having to sell stocks at a loss.

• Guardrail Method: Set a starting withdrawal rate (e.g., 4% of your TSP) and adjust slightly if markets rise or fall significantly. This dynamic method helps extend the life of your portfolio while still providing consistent income.

Both frameworks help prevent panic during market swings — and ensure you're not flying blind.

4. Plan for Inflation and Longevity

Retirement isn’t a 5- or 10-year sprint. It may last 20 to 30 years or more which means your plan must be built to last.

• G and F Funds help protect your income in the short term.

• But C, S, and I Funds are essential for long-term growth and keeping pace with inflation.

A portfolio that’s too conservative for too long can quietly erode your purchasing power.

Maintaining appropriate exposure to equities (even in retirement) is critical to financial security over decades.

The Takeaway

Confidence doesn’t come from watching markets daily — it comes from knowing you’ve built a structure that can handle whatever the market throws at you.

Federal retirees who document their plan, balance their income sources, and protect both short-term stability and long-term growth are equipped to face volatility with clarity instead of fear.

👉 This concludes our series: Surviving Market Volatility in Retirement.

Tomorrow, we’ll be back to covering a wide range of valuable retirement topics for future federal retirees.

Best,
—FWR