Somewhere, some place, there has got to be a sports book or group that tracks the world’s biggest 401k, the federal Thrift Savings Plan. Especially the rise and fall of how many members — current and retired feds and military personnel — have built TSP accounts worth at least $1 million. In some cases a lot more! And they did it the old-fashioned way. While the club has expanded and shrunk over the last 30...
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Somewhere, some place, there has got to be a sports book or group that tracks the world’s biggest 401k, the federal Thrift Savings Plan. Especially the rise and fall of how many members — current and retired feds and military personnel — have built TSP accounts worth at least $1 million. In some cases a lot more! And they did it the old-fashioned way. While the club has expanded and shrunk over the last 30 years due to the stock market and economic trends, mostly it’s getting bigger. Up until now. Feds are likely to get the word, this week, that membership in the club has plunged. And it’s a big drop. But not unexpected after a spectacular record-long run of the stock market. Considering the state of the world today — a changing pandemic, real war in Europe, inflation at a 40 year high and fuel prices skyrocketing — the pending dip is no surprise.
Peak membership in the seven-figure TSP Millionaires Club was December last year. At that time there were 112,880 people with accounts ranging from $1 million to $8.4 million. The Club shrank to 100,364 as of March this year. A downturn to be sure. But not bad for government workers and military personnel who are now among the nation’s salary elite.
The $8.4 Million Dollar Man/Woman is probably a member of Congress, political appointee, somebody on the Supreme Court or a member of the House or Senate, where millionaires abound. But the magic of the TSP is that thanks to the miracle of compounding, and the 5% match investors get, the vast majority of the club’s members are rank and file feds: postal inspectors, IT experts, NASA scientists, researchers at the National Institutes of Health, VA lawyers and doctors. People who invested for the long haul (an average of 29 years) and who stuck with the TSP’s three stock index funds (C, S and I) which cover the U.S. stock market along with an international fund. They stuck with them and continued to buy more during good times, but their smart move was to keep buying shares on sale because of various bear markets (a 20% dip). And especially those who kept buying C and S shares biweekly during the 2008-2009 Great Recession when stocks, we know now, were on sale.
The runup following the comeback (starting in March 2009) of the stock market kept adding more and more members to the Millionaires Club.
But while tracking the population boom of self-made millionaires, the real story is the numbers covering the rest of the TSP membership. The 6-million plus federal and military investors who are NOT in the club. But who — most of the time — have moved up a lot more often and for much longer periods of economic improvements which eclipsed, in the long run, current losses in the market.
On last week’s Your Turn radio show, financial planner Arthur Stein talked about the overall performance of the TSP since inception and how the stock markets suffered their worst January through June performance since the 1970s. He also talked about what feds, young and old, should be doing with their TSP accounts during these down times. Below are two charts that show the status of TSP accounts on Dec. 31, 2021 versus the numbers as of March 31. We’ll have the new numbers tomorrow. Meantime:
And these are the numbers at the end of last year:
Nearly Useless Factoid
By Daisy Thornton
Panama hats originated in Ecuador. They got their name because hat-makers in the 1850s found a more successful market for them in Panama, a major international trade center. Travelers would tell people they purchased the hat in Panama, and the name stuck.
Source:Wikipedia
FAQs
According to the latest figures from the Federal Retirement Thrift Investment Board (FRTIB), the agency which oversees the Thrift Savings Plan (TSP), there are now 88,265 TSP millionaires as of the end of March 31, 2023. This is a 14.8% increase since December 31, 2022 when there were 76,889 TSP millionaires.
Can TSP make you a millionaire? ›
Federal employees who are members of the Thrift Savings Plan (TSP) have the potential of becoming a TSP millionaire, with a fat nest egg in addition to their CSRS or FERS annuity. As of November 2022, there are 65,000 TSP millionaires.
How many millionaires are in the Thrift Savings Plan? ›
The number of Thrift Savings Plan millionaires is on the rise. There are now just over 88,000 TSP accounts totaling more than $1 million. That's about a 15% jump from the roughly 77,000 TSP millionaires that there were at the end of 2022.
How much do most people have in TSP? ›
The average Thrift Savings Plan balance for Federal Employees Retirement System participants — 3.3 million people — was $138,933 in January. That compares to an average TSP account balance of $146,642 for the 314,193 Civil Service Retirement System participants.
What is the most aggressive TSP account? ›
The C, S, and I funds are the more aggressive of the funds in the TSP. The reason they are called “aggressive” is because they have a much higher chance of sustaining major growth over time. But because of this, they can also be much more volatile than the G and F funds.
What is the most aggressive fund for TSP? ›
The conservative funds are the G and F funds and the aggressive funds are the C, S, and I funds.
What is the average TSP account balance for 2023? ›
Average TSP account balances for Uniformed Service Members reached $39,220.00 and Roth balances were $20,898.00, while average balances for BRS participants reached $11,597.00 and Roth balances were $10,025.00 as of April 2023. Just remember: We all start at $0 in the TSP, even TSP millionaires!
What is the average TSP balance at retirement? ›
Average TSP balances
The average TSP balance has grown steadily in the last decade, reaching the six-figure mark in 2013. As of 2021, the average TSP balance for FERS participants was $181,279, while the average TSP balance for CSRS participants was $194,424.
What is the best performing TSP Fund for 2023? ›
Best Funds for TSP Performance in 2023
Over the last 12 months, the C Fund is up 19.54%, the I Fund is up 19.08%, and the S Fund is up 15.24%. The most aggressive Lifecycle Funds (L Funds) were up 14.6% (the L 2055, 2060, and 2065 Funds) so far this year.
What TSP funds does Dave Ramsey recommend? ›
In a nutshell, Ramsey advises federal employees to invest at least 5% in a Roth TSP, then invest the rest in a Roth IRA. He also recommends investing in a handful of TSP funds -- funds C,S, and I -- with a higher percent in the C Fund (at least 60 to 80%).
Every Thrift Savings Plan fund scored positive returns in January, starting out 2023 on a good note for federal investors. The biggest winner was the small cap stock index S Fund, with a return of 10.82%. Its share prices rose from $61.14 to $68.19.
Where do millionaires store their money? ›
Where do millionaires keep their money? High-net-worth individuals put money into different classifications of financial and real assets, including stocks, mutual funds, retirement accounts and real estate.
What is the safest TSP fund? ›
What is the safest TSP fund? The G fund is generally the safest option as it invests in government securities. Although you won't lose money investing in this fund, your rate of return will be low. This may be a good option if you are close to retirement.
Should I keep my money in TSP after retirement? ›
Depending on when you begin retirement, you can simply leave the money in the TSP let it continue to grow. If you do not need to access it yet, it might be wise to let it be. Similar to other retirement accounts, you will need to begin minimum withdrawals at age 72. This is called a Required Minimum Distribution (RMD).
Should you max out your TSP? ›
It depends, but most people should contribute to their TSP at least up to the matching funds limit (3% of your salary). Beyond this, the TSP is better if your taxes are high today and you expect them to be much lower in retirement. It is better to use your deduction against the higher tax rate.
What is the average TSP balance for retirees? ›
Average TSP balances
The average TSP balance has grown steadily in the last decade, reaching the six-figure mark in 2013. As of 2021, the average TSP balance for FERS participants was $181,279, while the average TSP balance for CSRS participants was $194,424.
How much does the average federal employee have in TSP? ›
There are 3.6 million Federal Employees Retirement System participants, with an average account balance at the end of 2020 of $164,000. There are 287,000 Civil Service Retirement System participants, with an average account balance at the end of 2020 of $175,000.
How many total 401k millionaires are there? ›
Of the over 35 million retirement accounts Fidelity manages, there were 299,000 401(k) millionaires and around 280,300 IRA millionaires in the fourth quarter of 2022. That's compared to 442,000 and 376,000, respectively, at the same time in 2021.
How many people are 401k millionaires? ›
While so-called "401(k) millionaires" make up only 1.4% of the 21.5 million people with Fidelity accounts, the average value of a Fidelity plan dropped by 20.5% as the S&P 500 (^IN) tumbled 19.4% in 2022 amid a year of everything from war, energy uncertainty and widespread inflation.
