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The federal government-sponsored Thrift Savings Plan (TSP) began offering "lifecycle" funds in 2005 as a choice for those interested in saving for retirement. Some 75,000 members of the uniformed services (and 300,000 total federal government employees) now invest in the TSP's lifecycle or "L" Funds. These funds offer a number of benefits, but it's important to know what you're getting into before you invest.
Lifecycle funds typically make investment mixes, or allocations, based on a target retirement date — such as 2020, 2030, etc. — when you will need to use the money in your TSP account. If that date is a long time from now, the lifecycle fund will be more heavily weighted toward stocks or stock mutual funds. But as the date approaches when you will need your money, the investment mix will become weighted more heavily toward fixed-income or stable value investments, including bonds or bond funds and Treasury securities. This gradual shift to more conservative investments is designed to reduce your risk as you approach retirement.