Is your TSP escalator going down?

Is your investing glass half-full or half-empty? Are you on the downward escalator even though what you want is up?

Do even small setbacks in the stock market effect you more than big gains, and could that be one of the reasons most of the money workers and retirees have invested in the federal Thrift Savings Plan is in the fund that generally has the lowest returns by almost any measure?

Despite a decade of mostly good-to-excellent returns in the stock-indexed C, S and I funds, most of the money feds have invested in their in-house 401(k) plan — 31.6% — is in the treasury securities G fund, which typically had the lowest returns.

At the end of May the G fund had a year-to-date return of 1.09% and 2.87% for the last 10 months.

The large cap stocks C fund had just over 29% of all TSP investments with a year-to-date return of 10.73% and a 3.77% return for the last 12 months.

For the month of May the C fund was down 6.36% while the steady-as-she-goes G fund returned 0.21%. Even the bond-indexed F fund beat out the G fund, returning 1.77% in May, 4.79% year-to-date and 6.51% over the last 12 months.

When it comes to investing for retirement, federal and postal workers and members of the military are way ahead of their private sector counterparts. In April the average Federal Employees Retirement System participant’s TSP balance was $145,423. That was up from $142,512 in March. The 300,000-plus active workers still under the old Civil Service Retirement System had an average account balance of $153,391 in April, up from $150,467 the month before.

The TSP charges among the lowest administrative fees in the business. Unlike many private sector 401(k) plans which offer little or no employer-match, the government will match up to 5% for FERS contributors. That employer-match and the TSP’s low fees are a major reason workers are investing as much as they are and, despite short-term setbacks, are seeing accounts grow.

Thanks to steady investing during and after the Great Recession meltdown of 2008-09 the number of self-made TSP millionaires is exploding. Between March 2018 and March of this year the number of TSP investors with accounts of $1 million or more jumped by 9,540 to a record 32,638. Although that includes some wealthy political appointees and high-priced lawyers turned federal judges, the vast majority of TSP millionaires — one of whom has $7 million — are ordinary workers. They’ve been investing an average of 29 years and continued to invest in the higher-rise-higher-reward stock funds during bad times — when shares were on sale — and good. For more on the millionaires club plus annual returns for the TSP’s different funds 2009-2018, check out the chart of annual rates of return below.

Year G Fund F Fund C Fund S Fund I Fund
2009 2.97% 5.99% 26.68% 34.85% 30.04%
2010 2.81% 6.71% 15.06% 29.06% 7.94%
2011 2.45% 7.89% 2.11% (3.38%) (11.81%)
2012 1.47% 4.29% 16.07% 18.57% 18.62%
2013 1.89% (1.68%) 32.45% 38.35% 22.13%
2014 2.31% 6.73% 13.78% 7.80% (5.27%)
2015 2.04% 0.91% 1.46% (2.92%) (0.51%)
2016 1.82% 2.91% 12.01% 16.35% 2.10%
2017 2.33% 3.82% 21.82% 18.22% 25.42%
2018 2.91% 0.15% (4.41%) (9.26%) (13.43%)
10 Yr Compound 2.30% 3.73% 13.17% 13.67% 6.48%

Percentages in ( ) are negative

For a long haul, rear view mirror look at the performance of the TSP funds, check these official numbers. Pay particular attention to the 2009 and 2010 returns for the C, S and I funds as the market started climbing out of the 2008 recession. To understand how the TSP calculates rates of return for any given period of time and determines compound annual returns, read the Fact Sheet.

Most financial advisers say that people investing for a retirement that might not begin for 10, 20 or 30 years need to take a long-haul approach and generally ignore the short-term ups and downs of the stock market. It is also important to remember that retirement could last decades or maybe even longer than you actually worked. And many people, especially those under CSRS, may not touch their TSP accounts for years, if ever.

Nearly Useless Factoid

By Amelia Brust

Adeline and Augusta VanBuren were the first women to cross the continental U.S. on solo motorcycles in 1916, also becoming the first women to summit Pikes Peak on motorized vehicles. Their mission was to prove women could serve as dispatch riders for the military, and they wore military-style leggings and leather riding breeches which got them arrested more than once.

Source: American Motorcyclist Association Hall of Fame

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THRIFT SAVINGS PLAN TICKER

Oct 15, 2021 Close Change YTD*
L Income 23.2404 0.0377 3.52%
L 2025 12.0440 0.0378 6.40%
L 2030 42.6549 0.1817 7.92%
L 2035 12.8272 0.0595 8.58%
L 2040 48.6049 0.2448 9.26%
L 2045 13.3308 0.0713 9.83%
L 2050 29.2386 0.1664 10.41%
L 2055 14.4251 0.1019 12.65%
L 2060 14.4251 0.102 12.65%
L 2065 14.4249 0.1019 12.65%
G Fund 16.6826 0.0006 0.99%
F Fund 20.8640 -0.0506 -1.40%
C Fund 67.3040 0.4981 15.90%
S Fund 86.1731 -0.0636 11.66%
I Fund 39.1567 0.3956 8.56%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.