So why aren’t you a TSP millionaire?

Many people believe that the federal Thrift Savings Plan, with its generous  government match, low fees and strict oversight is the best employer-backed 401(k) plan around. Anywhere, period, end of discussion!

Many inside and outside of government envy the number of feds who have million dollar accounts thanks to steady investing in the TSP’s stock funds through good, and especially bad times. But one long-time fed, himself a successful TSP investor, said the real question is why so many TSP investors — 87% of the total — have account balances that are so relatively small? Small being $250,000 or less.

So we asked that TSP investor, Abraham Grungold, a 34-year civil servant, to put on his off-duty financial coach cap and look at the situation. Is the glass half full or half empty, and why?  He says the problem is fear and procrastination. That’s why there are so relatively few — in his opinion — TSP millionaires and why so many investors are dangerously careful with their accounts. Here’s what he said:

How to become a TSP millionaire: Overcome your procrastination and fear

The December 2018 market adjustment caused the total number of TSP millionaires to drop from 23,962 as of Dec. 31, 2017, to 21,432 as of Dec. 31, 2018.

Account Balance Number of Participants Average Years Contributing to TSP
<$50,000 3,192,384 6.45
$50,000-$249,000 1,476,045 16.54
$250,000-$499,000 446,697 22.27
$500,000-$749,000 144,121 25.44
$750,000-999,000 52,062 28.02
>$1 million 21,432 29.63
Total 5,332,741 11.38

The critical figure in the above chart is that 87% of TSP participants (4.7 million out of 5.3 million), have an account balance that is less than 250,000. So why are there not more TSP millionaires? I believe this is due to two major personality traits that have nothing to do with the rise and fall of the stock markets.

The two traits are procrastination and fear. During my long career, I have worked at four different federal agencies and I have heard the same thing over and over from co-workers regarding their TSP participation.

Here are the examples of procrastination, as in making excuses not to contribute:

  • “I want to save for a house.”
  • “I want to pay off my school debts.”
  • “I want to save for my wedding,” and,
  • “I will begin contributing to the TSP during the next open season.”

If you contribute 5%, the government gives you a 5% match. I would explain to co-workers that when they do not make their 5% contribution it is like giving up a 5% matching bonus each year. This statement would always get their attention.

Here are examples of fear, or “I will only invest in the G fund”:

  • “I do not want my balance to decrease even $1.”
  • “The market will soon experience a recession,” and,
  • “The other TSP funds are too volatile.”

I completely understand their concerns, but many of my co-workers fully understand the power of investing and they still only choose the G fund. Investing your entire career in the G fund will only provide you with a balance of approximately $250,000. However, taking greater risk will generate bigger rewards.

Many feds say that the TSP millionaires are employees who make over $100,000 per year. The following chart will prove that is false. As shown below, the employee begins with a $50,000 per year salary and receives a 1% cost of living adjustment for the next 31 years. Also, the employee contributes 5% of their salary and receives the 5% match.

Since January 1988, the C fund has earned an average rate of return of 10%. So, we will apply an annual growth rate of 10%. At the end of 31 years, these variables can result in a TSP balance of $1,037,566 — as simple as that.

Years to Make Contributions: 31
Annual Pay: $50,000.00
Pay Schedule: Biweekly
Percent Salary to Save: 5%
Expected Percent Salary Increase: 1.00%
Annual Catch-up Contributions: $0.00
Number of Years Until You Start Withdrawing: 31
Expected Annual Return: 10.00%

In summary, if you want to be a TSP millionaire, you need to take some risk and plan on working a 30-year career. It is the only way to get there!

You can connect with Abraham Grungold on Linkedin and Facebook.

Nearly Useless Factoid

By Amelia Brust

Although not everyone knows how to swim, humans — like many mammals — are born with what’s known as a “dive reflex,” or bradycardic response. This is when the face is exposed to water and the heart slows down, meanwhile blood shifts away from the peripheral muscles to conserve oxygen for the brain and heart. When this happens to infants they typically hold their breath; it’s the same reflex that protects babies from getting milk in their lungs. This reflex tends to fade away in older infants.

Source: Popular Science

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Nov 26, 2021 Close Change YTD*
L Income 23.2856 -0.111 4.85%
L 2025 12.0665 -0.1154 8.89%
L 2030 42.7291 -0.5654 11.31%
L 2035 12.8482 -0.1867 12.31%
L 2040 48.6780 -0.7731 13.33%
L 2045 13.3482 -0.2272 14.19%
L 2050 29.2724 -0.5333 15.08%
L 2055 14.4363 -0.3307 18.41%
L 2060 14.4363 -0.3306 18.41%
L 2065 14.4362 -0.3305 18.41%
G Fund 16.7127 0.0015 1.12%
F Fund 20.9220 0.1624 -1.44%
C Fund 69.2640 -1.6088 24.02%
S Fund 84.8572 -2.1223 17.73%
I Fund 37.8901 -0.8469 11.23%
Closing price updated at approx 6pm ET each business day. More at
* YTD data is updated on the last day of the month.