And so it goes for federal employees and the Thrift Savings Plan version, the Lifecycle (L) Fund family, which became the default option for TSP participants in 2015. According to the TSP 2022 Annual Report, almost 67% of younger federal employees are enrolled in L Funds and I, for one, am here for it! The reason I am such a big proponent of L funds is that they efficiently automate what most people have neither the expertise nor inclination to do manually. They ensure that your retirement account is not only properly balanced in terms of overall risk tolerance, but also well diversified within asset classes.
To those who say that target date funds, such as the L Funds, are fine for beginners but that more sophisticated investors should move on, my retort is that no one outgrows the need for asset allocation (stocks versus bonds) and diversification (different types of stocks and bonds). But there is a kernel of truth in the criticism of funds such as L; they propose a “one-size fits most” solution. Some of us are unicorns, or at least we like to think that we are. There is a solution, however.
