The best TSP allocation by age: a decade-by-decade guide

Why there's no single "best" allocation

Search "best TSP allocation" and you'll find confident answers like "100% C Fund" or "never touch the G Fund." Those answers ignore what makes your situation yours. Two 45-year-old GS-12s can reasonably hold very different portfolios. One might expect a large FERS pension and have a paid-off house. The other might plan to leave federal service at 50 and rely mostly on the TSP.

The numbers and ranges in this guide are illustrations of how planners think, not recommendations. They show the trade-offs so you can make a better-informed decision, or have a better conversation with an advisor. If you need a refresher on what each fund holds, start with TSP funds explained.

Step 1: Decide your stock vs. stabilizer split

Think of the TSP's five funds as two groups:

• Growth engine: C, S and I Funds. Stock index funds with the highest long-term growth potential and the deepest drawdowns. U.S. and international stocks have both fallen 30% to 50% or more in severe bear markets.
• Stabilizers: G and F Funds. The G Fund can't lose principal (TSP Summary). The F Fund is a broad investment-grade bond index that usually moves less than stocks, although it can lose value when interest rates rise.

Research on portfolio construction has long found that the stock/bond split drives most of a diversified portfolio's ups and downs. Whether you hold 60% or 90% in stocks will shape your experience far more than whether you tilt toward the S Fund or the I Fund.

A popular rule of thumb, and its limits

One old shortcut says to hold "your age in bonds." A 40-year-old would hold 60% stocks and 40% G/F. Many modern variations use "110 or 120 minus your age" for the stock share, because people live longer and bond yields have at times been low. These rules are easy to remember. But they ignore pensions, Social Security and other assets, and those factors matter enormously for federal employees, as you'll see below.

How allocation typically evolves by decade

The ranges below show how many planners and target-date designers think about risk over a career. Treat them as a starting point for discussion, not a prescription.

Illustrative ranges for discussion only. They are not recommendations, and the right mix for you depends on the factors below.

In your 20s and early 30s

Time is your biggest asset. You have decades of contributions ahead of you, so a market crash mostly lets you buy shares on sale. The biggest wins at this stage aren't about allocation at all. They're about contributing at least 5% of basic pay to get the full agency match (FERS and eligible BRS members get the 1% automatic contribution plus matching on the first 5% of pay; see our 2026 contribution limits guide) and raising your rate with each raise. If you're automatically enrolled, check where your money went. New participants who don't choose are generally placed in an age-appropriate L Fund.

Many young investors keep most or all of their TSP in stock funds. A common "total market" style split holds the C and S Funds roughly in proportion to U.S. market size (C is the much larger share) and adds the I Fund for international exposure. Holding 100% G Fund in your 20s feels safe, but it mostly trades away growth for stability you don't need yet.

Mid-30s through your 40s

Your balance is now large enough that a 30% decline is a real dollar amount, maybe a year's salary or more. This is when many people learn their true risk tolerance. A useful test: in 2008 or March 2020, would you have held on, bought more, or moved everything to the G Fund? Moving to G after a crash locks in losses and often means missing the rebound. If you know you'd react that way, a somewhat more conservative mix that you can actually stick with may serve you better than an aggressive one you'll abandon.

Your 50s

Two things change. First, you become eligible for catch-up contributions: $8,000 in 2026, or $11,250 if you turn 60 to 63 this year (tsp.gov). Second, the cost of a major loss rises because you have less time to recover. Many people begin building a larger G/F cushion here. Some planners use a "bucket" approach and target several years of expected withdrawals in the G and F Funds by the time they retire.

The retirement red zone: sequence-of-returns risk

The order of returns barely matters while you're only adding money. Once you start withdrawing, it matters a lot. Picture two retirees with the same average return over 25 years. One gets the bad years first and the other gets them last. The first retiree can run out of money much sooner, because withdrawals during a downturn sell shares at low prices, and those shares can't recover.

That's why many planners consider the five years before and after retirement the most important period for managing risk. Ways to reduce sequence risk inside the TSP include:

• Holding enough in the G Fund to cover a few years of planned withdrawals, so you aren't forced to sell stocks in a crash.
• Rebalancing deliberately during downturns, for example by moving money from the G Fund back into stock funds after a decline instead of selling stocks to fund withdrawals. Check the current withdrawal options on tsp.gov and how each one draws on your funds.
• Keeping a meaningful stock share for growth even in retirement, because a 30-year retirement still needs protection from inflation.

We explain how installments, partial withdrawals and RMDs work in TSP withdrawal rules.

Factors that matter as much as age

1. Your pension

A FERS basic annuity or military retired pay is a guaranteed, inflation-adjusted income stream (with some limits for FERS). It acts a lot like a large bond holding. A retiree whose pension and Social Security cover most of their spending can often afford more stock risk in the TSP than someone with no pension, because they won't need to sell stocks in a downturn to buy groceries. In contrast, a federal employee leaving early with a small deferred annuity may need a more conservative TSP.

2. Your other assets

The TSP is often only one account. If you or a spouse also hold IRAs, a 401(k), a brokerage account or cash savings, the right TSP allocation depends on the household total. For example, you might hold stable assets in the TSP's G Fund, which has no true equivalent outside the plan, and hold stocks elsewhere.

3. Job stability and emergency savings

Federal employment is relatively stable, but not guaranteed. Shutdowns, reductions in force and military transitions happen. An adequate emergency fund outside the TSP makes it easier to hold more stocks inside it.

4. Behavior

The best allocation is one you'll stick with through a 35% decline. A slightly more conservative portfolio that you hold through a bear market often beats an aggressive one that you sell at the bottom.

L Fund or do-it-yourself?

The L Funds handle the decade-by-decade shift for you. They adjust their targets every quarter and rebalance every trading day (tsp.gov). For many people, picking the L Fund closest to the year they expect to start withdrawing, and leaving it alone, is a perfectly reasonable strategy. Some choose a later-dated L Fund for more stock exposure or an earlier one for less. tsp.gov explicitly notes you aren't required to use the fund matched to your birth year.

Building your own mix makes more sense when you're coordinating with a pension and outside accounts, or when you want a specific stock/bond split the L Funds don't offer. If you go that route, set a target and rebalance, for example once a year or when any fund drifts more than about five percentage points. Remember the TSP's limit: after your first two interfund transfers or reallocations in a calendar month, you can only move money into the G Fund for the rest of that month (TSP Summary).

Common allocation mistakes

• Staying in the G Fund for decades because it never goes down, and giving up growth you'll likely need.
• Chasing performance by moving everything into whichever fund did best last year.
• Bailing out after a crash and missing the recovery. Market timing works only if you get both the exit and the re-entry right.
• Mixing an L Fund with individual funds without realizing the L Fund already holds all five.
• Ignoring the pension when deciding how much stock risk you can afford.

The bottom line

Age is a useful starting point. Younger investors can usually take more stock risk, and people nearing retirement usually need more stability. But the best TSP allocation for you depends on your pension, your other savings, your retirement date and your temperament. Pick a split you can live with, rebalance it, and adjust it as your life changes.

Frequently asked questions

Keep learning

Want to keep tabs on your C, S, I, F and G Fund mix all year? See what's included in a TSP Maxing membership.