TSP Planning Report March 2026
Facts:
- The second estimate for Q4 2025 Gross Domestic Product (GDP) was released on February 20th and indicated the economy grew at a 7% annualized rate during the quarter.
- The Federal Reserve met on March 17-18 and voted to leave interest rates unchanged. The Federal Reserve tends to make policy decisions based on broad inflation and not just energy prices. As such, recently higher fuel costs on their own should not lead to future rate hikes.
- The unemployment rate increased to 4.4% in February following a lackluster jobs report. The report indicated 92,000 jobs were lost during the month, although the data was somewhat skewed due to bad weather and strike activity.
- The US Manufacturing Purchasing Managers Index (PMI) slumped to 51.6 in February. The decrease was mostly attributed to extreme winter weather.
- The G Fund interest rate fell to 4.00 % in March as interest rates broadly declined. Coincidentally, mortgage rates are now at their lowest levels since 2022. Trump has directed Fannie Mae and Freddie Mac to purchase mortgage bonds to put continued downward pressure on rates.
- The S&P 500 (C Fund) is up 0.68% year-to-date while the small/mid cap S Fund is up 1.84%. Energy is the best performing sector year-to-date, with the S&P 500 Energy Index gaining 31.03% so far.
Analysis & Outlook on Iran Conflict
The global markets have dropped and oil prices spiked since the scuffle in Iran began, reaching nearly $120/barrel on March 9th before retreating back to $87 by the day’s end (StockCharts). Prices have inched higher since and currently rest just above $93/barrel
Messaging on both sides of the conflict provide little clarity, with Trump noting that “. . . the war is very complete, pretty much” and that the U.S. is “very far” ahead of schedule in their operation (CNBC). Meanwhile, Iran has noted that it is ready for a long war and will continue to attack energy infrastructure and military targets in neighboring countries to inflict economic pain globally (CNN). Both sides will likely continue to assert that they have the position of strength until one side either yields or presses for a ceasefire.
Much like the “tariff tantrum” of 2025, we find ourselves once again in an event-driven market in which global assets are swinging and swooning with each headline. We won’t pretend to know what will happen over the near term, but we are keenly aware of the risks of a drawn-out conflict. Specifically, an extended engagement in the Gulf that results in disabled energy infrastructure would most likely cause energy prices to rise and stay elevated, triggering a wave of global inflation. Economies can usually handle some inflation, especially over short time horizons, but prolonged higher prices can cause economic stress and potentially even recession (Morningstar).
While the end-date and ultimate resolution of the conflict is unknown, here are some policy paths likely in consideration to provide economic relief in the face of higher energy prices:
- Strategic Petroleum Reserve (SPR) releases – The Strategic Petroleum Reserve was created in 1977 and has been used to mitigate energy supply disruptions since (Department of Energy). The amount of crude oil in the SPR is currently at multi-decade lows (Department of Energy), but some policy makers are still pushing for releases to ease pain at the pump. Overall, we view SPR releases as a short-term solution that would only modestly impact the cost of energy.
- Reinvigorating Venezuela’s oil infrastructure and production – Oil production in Venezuela plummeted by over 50% from 2015 through present (Congress), caused by a combination of economic sanctions, local mismanagement, and decaying infrastructure. It’s Trump’s hope that their new regime, aided by foreign investment, will be able to drastically increase production. This, however, will take time and likely not impact fuel prices over the near term.
- Military escorts in the Strait of Hormuz: The idea of providing military escorts to oil tankers through the Strait of Hormuz has been floated, but this idea is risky. Specifically, this potentially opens the door for escalation, as a well-placed sea mine or missile could damage or sink a vessel, military or civilian.
Of course, the optimal path to economic relief is de-escalation. The likelihood of this occurring over the near term may be that of a coin flip. Longer term, however, politicians know that Americans don’t want an “Iraq 2.0” and Trump will likely take steps to ensure the conflict isn’t drawn out, especially during a mid-term election year.
We will continue to monitor the situation daily for signs of escalation/de-escalation as well as indications that combat may be affecting the health of the global economy. For now, longer term market risk appears to be contained, and recent stock declines should likely be viewed as pullbacks within an ongoing global bull market. And, once calmer skies return, we expect the global uptrend in stocks will resume.
FAQ
Most frequent questions and answers
Choose the portfolio that matches your goals. You will be able define your goals greatly with the TSP Planning Calculator. The Calculator will tell you what Rate of Return you need in your TSP. Once you know what return you need, you will see which portfolio matches that return. For example, “The 5% Portfolio” will target an ANNUAL 5% return. “The 7% Portfolio” will target an ANNUAL 7% return. Etc. In addition to the target rate of return, each portfolio has an expected range of fluctuation, which indicates the level of risk associated with that portfolio. Each month you will see my new allocations for each portfolio. The targeted return will not change, but the allocation and the associated risk needed to yield the targeted return WILL CHANGE EVERY MONTH. As it changes, we will update you with our new allocations that may carry MORE or LESS risk in order to achieve the targeted return. You should ALWAYS REVIEW THE TARGET RETURN IN CONTEXT OF THE RANGE OF FLUCTUATION. You need to be comfortable with BOTH the rate of return & the range of fluctuation. Sometimes you will find that both of the above criteria are met in a single portfolio. That portfolio would be your portfolio of choice for that month. However, sometimes the two criteria don’t land within one portfolio. In such a case you must choose which criterion supersedes the other. If you need help with this, please contact me at stephen@stephenzelcer.com.
When choosing your portfolio you need to consider and be comfortable with BOTH the rate of return & the range of fluctuation. That being said, you have two choices: Either increase your savings rate so you can lower the rate of return needed, or choose the portfolio with the higher return. There’s nothing wrong with choosing a higher rate of return than you need, so long as you are comfortable with the associated risk. You may be pleasantly surprised to find that a more aggressive portfolio carries a range of fluctuation that you are comfortable with. You should ALWAYS REVIEW THE TARGET RETURN IN CONTEXT OF THE RANGE OF FLUCTUATION.
I know some investors misunderstand this service as providing 1-time allocations that last forever. It is far from that. It is designed to keep an eye on market conditions and adjust the portfolios as we encounter new economic strengths or weaknesses. When indicators tell me it’s time to adjust, I adjust and I pass that info along to all my subscribers. Think of it driving a car to a destination, and your GPS is monitoring for traffic, road closures, tolls, delays, alternate routes, etc. This service is the GPS for TSP investors.
Of course! Just because you’re retired doesn’t mean you shouldn’t have goals for your TSP. In fact, many retirees NEED their TSP to produce certain returns in order to remain retired. If you are not clear how much you’ll need your TSP to produce in retirement, you may appreciate my retirement workbook “Ready, Aim, Retire!” This book is available to members.
This is a personal decision. You will certainly want to revisit your goals to make sure they still apply. Perhaps they’ve changed over time. I would say, as a general rule, reviewing your goals once a year is a responsible practice. If you have a life event, that may be grounds to review your goals, too.
In order to figure out if you need an annuity, you need to figure out the rate of distribution from your TSP. Whatever your balance is – whether $100k, $500k, $999k – you will need to figure out your rate of distribution. For example: If you need $10k a year of income, that $10k represents a 10% distribution rate from $100k, 2% of $500k, or about 1% of $999k. If your distribution rate is low enough, you may avoid any need for an annuity. However, above a certain threshold – which I outlined using a documented study – that’s where you have to choose between strategic investing vs. a guaranteed annuity income stream.
The model should be applied to BOTH. This is easy. The whole reallocation process should not take you more than 5 minutes per month. I will even be sending you a “heads up” email at the beginning of each month reminding you to set aside 5 minutes of your time to make your TSP changes when you receive the monthly update.
This means that if you continue saving at the rate you’re saving, you will actually have more than enough money to retire on. In this case you can either decrease your savings rate, or you can plan a more expensive retirement.
