The TSP LifeCycle funds are target date funds. This means that the fund’s allocation automatically becomes more conservative as the ‘target date’ of the fund approaches. These are common investments in retirement savings accounts. The TSP version of target date funds have a relatively high allocation to cash (G fund) and to the S&P 500 index (C fund). As time passes the cash allocation increases rather quickly – perhaps more quickly than is appropriate from some investors. This can cause loss of potential growth in the TSP account. However, allocation to the G Fund provides less account balance volatility.
While it is very important to reduce volatility as one approaches retirement, this can be accomplished without such a high allocation to cash. Everyone’s situation is unique and the LifeCycle funds are appropriate for some participants. It is a function of a number of variables and your financial adviser can help you make that decision.