I need a hypothetical returns calculator for TSP funds.July 4, 2013 7:02 PM   Subscribe

I'm going to be taking a 6-month hiatus from contributing to my federal TSP (401K equivalent) account. I know exactly what I am currently contributing each paycheck, and to which funds as a percentage and an actual cash amount. I want to be able to calculate hypothetical returns from an arbitrary date so that I can be sure when I have actually made up for the losses incurred by the break.

I'm not quite sure if that's clear enough, so let me know if I'm leaving something important out.

Ideally there is a financial calculator out there that will let me specify a monthly contribution amount, a starting balance, a percentage based fund contribution split, and a starting date and will spit out what my ending balance would have been. Does such a thing exist? How can I approximate it if it doesn't?
posted by jsturgill to Work & Money (4 answers total)

So, is your intent that you will, in the future, for some period of time, contribute some amount in excess of the amount you have been contributing monthly (after contributing nothing for a 6 month "vacation" period), until, by excess future contribution, you overcome the loss of future earnings that your six month "vacation" from contributions will cause? Because, that's calculable, but you'll have to find a calculator that deals with non-level periodic contributions, and allows you to specify expected earnings rate through the "vacation" period, and separately, given the likelihood of soon-to-be-real changing interest rates, a long term earnings rate. And, unless you can read tea leaves in the Wall Street Journal, you'll have to future project interest rates, and perhaps, inflation and management costs on your assets, through the periods in question.

You could build such a calculation in Excel, as here. using a future value of uneven cash flows template, for some future time certain. But this is not for the faint of heart, if you are unfamiliar with NPV and time value of money calculations.
posted by paulsc at 7:36 PM on July 4, 2013

Well, the go-to place for calculators of all sorts of common questions would be Bankrate.com.

There are a bunch of complicated ways you could go about doing this, but one easier way would be to just determine your current age-65 kitty based on current contributions, figure your starting point from six months without contributions (i.e. historical earnings applied to current balance), then calculate the contribution necessary to meet that same goal from that point forward. Since you're putting some hard numbers down by specifying a six-month contribution vacation, you can do this a lot more simply than if you were trying to figure, say, how long a vacation you could take until the new contribution level would be beyond your means (indicating you would have to either limit the vacation or accept lower earnings).
posted by dhartung at 12:08 AM on July 5, 2013

Don't forget that if your agency has a matching percentage, you're missing out on that contribution as well. A 100% or 50% match is nothing to sneeze at, but they will not make up that contribution later during your catch-up phase.

If you can swing it, you may be better off cutting down to the maximum match contribution level.

If you are cutting contribution because you need the money (furlough?), also remember that you can take a TSP loan against your balance, to be paid back over up to 5 years for non-house-purchase loans (or shortly after separation from service).
posted by bookdragoness at 6:39 AM on July 5, 2013

So, is your intent that you will, in the future, for some period of time, contribute some amount in excess of the amount you have been contributing monthly (after contributing nothing for a 6 month "vacation" period), until, by excess future contribution, you overcome the loss of future earnings that your six month "vacation" from contributions will cause?

Yes, I think that's right. I would be fine with a largeish margin of error in return for simplicity of calculation. Within reason.
posted by jsturgill at 8:25 AM on July 5, 2013

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