Saving for retirement is long-term. It’s an investment. It takes time. First, you need to establish your retirement goals and a strategy that helps you reach those goals. It’s much easier to stick to your plan once you have made goals and develop and a strategy.
Avoid Chasing Returns
Distractions happen. Don’t let short-term market movements lead you astray. Avoid merely chasing returns. Trying to “time the market” means you must be consistently correct twice—knowing exactly when to get out of a particular asset class and exactly when to get back in. This may work at times, but its’ highly unlikely to be successful over long periods.
Your investment performance is determined, in large part, by your asset allocation, not by guessing which market is going to be in favor at a certain time. Significant changes can occur quickly in stock markets. By the time you react, the market may already be moving in the opposite direction. This could cost you a lot of money over time.
It’s easy to be consistent about saving for retirement since you make contributions to your TSP through payroll deduction. Further, if you’re investing 5% of your salary, your agency matches that to help you even more.
Revisit Your Plan
Just as it’s important to stick to your plan and be consistent about saving, it’s equally as important to periodically review your strategy to make sure it’s in line with your needs, goals, timeline, and risk tolerance.
There are reasons to adjust your TSP allocation, such as approaching your retirement date. This should also signal a need for adjustment to your timeline and a consideration for a more conservative asset allocation.
Other events that might require modification include marriage, divorce, job change, military service, or economic hardship.
Remember, saving for retirement is long-term. Be patient. Trust the process. Be proactive, not reactive. Doing these should help you reach your retirement goals.