What FERS Employees Need to Know About L Funds in the TSP

Hi Friends, Mike Lanway here with AllAboutFERS.com

If you’re a FERS employee, chances are you’ve heard of the Thrift Savings Plan (TSP) and its L Funds—but maybe you haven’t spent much time thinking about what they really do, or how to choose one that fits your plan.

Let me give you a little clarity and a little peace of mind when it comes to how your retirement savings are being managed—especially if you’re not the kind of person who enjoys studying markets or fine-tuning investments.

What Are L Funds, Really?

L Funds—short for Lifecycle Funds—are designed to help you grow your retirement savings with minimal effort. They were created for folks like many of you, who are focused on your job, your family, your health, and your goals—not watching the stock market.

You don’t need to be an investment expert to use them well. In fact, here’s what you do need to know:

The only question you have to answer is:“When do I expect to start spending this money?”

That’s it. Once you pick a fund that lines up with your target retirement year, the L Fund takes over. It automatically adjusts its mix of investments over time, becoming more conservative as you approach retirement. You get a tailored glide path without having to rebalance or reallocate anything yourself.

They’re Aiming for a Specific Return—So Know What That Is

Now, here’s something many people miss: every L Fund has a target return trajectory. That means they’re built with a certain performance in mind over a certain time frame.

Most people don’t read the fine print or review the L Fund information sheet, but you should. Not because it’s exciting reading—but because it helps you set expectations and avoid surprises.

Your TSP L Fund is designed to help replace about 70–80% of your working salary during retirement, when combined with your annuity and Social Security. And for some of you, that will feel like plenty. For others, it might fall short.

So ask yourself: Will 70 to 80% of my current income be enough for me to live the life I want in retirement?If the answer is no, then you’ve got time to adjust.

This is the kind of planning you’ll want to do sooner rather than later. Because the earlier you understand where your TSP is headed—and whether it lines up with your vision for retirement—the better you can course-correct if needed.

One Decision, Long-Term Impact

Here’s what I love about the L Funds: they give people the ability to make one solid decision and then live their life without babysitting their investments every day. That’s a powerful gift, especially if finances aren’t your favorite subject.

But it still matters that you understand what they’re designed to do. It’s your retirement on the line. And it’s your peace of mind we’re trying to protect.

At All About FERS, we help federal employees look at their whole picture—not just the rulebook. If you want help understanding which L Fund makes sense for you, or whether your TSP strategy is on track, come visit us at AllAboutFERS.com. We’ll meet you where you are.

Talk soon,
Mike Lanway