TSP starts out 2023 in the black | Federal News Network (2024)

FAQs

What is the TSP performance in 2023? ›

For the past 12 months, it gained 10.19%. So far in 2023, it has gained 11.74%.

The conservative funds are the G and F funds and the aggressive funds are the C, S, and I funds.

Stock Price Forecast

The 3 analysts offering 12-month price forecasts for TuSimple Holdings Inc have a median target of 2.00, with a high estimate of 5.00 and a low estimate of 1.00. The median estimate represents a -9.71% decrease from the last price of 2.22.

Despite the turnaround in 2023, the total number of TSP millionaires is still lower than it was at the time of the stock market's recent peak. As of December 31, 2021, there were 112,880 millionaires in the federal government's Thrift Savings Plan (TSP).

The heir apparent to that title is the international stock index I fund; its March returns of 3.11% propelled it to first place in 2023 with a year-to-date return of 8.63%.

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.

However, the L Income Fund is the most conservative of the L Funds. It focuses on money preservation while providing a small exposure to the riskier funds (C, S, and I Funds) in order to reduce inflation's effect on your purchasing power.

By this measure, the I Fund is the riskiest, with a maximum drawdown of -60.89%, which occurred during the 2008-2009 global financial crisis. (An investor who'd bought the fund at its peak in 2007 would have experienced a 60.89% loss by March 2009).

July is Best Month for TSP Performance Since Trump Administration: One Fund Up 10.32% TSP performance in July was a bright spot in a dismal year for TSP fund returns.

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.

Employees should invest at least 5% in the TSP; that is the percentage needed to obtain the maximum available matching funds. Beyond that, Employees need to balance long-term investment needs against other needs.

TSPs and 401(k) plans are alike in giving employees tax advantages over other approaches to saving for retirement. For federal employees, TSPs' automatic contributions, higher employer matches and low fees probably make them a superior choice.

While they may not have as many funds to choose from, TSP participants do have one big advantage over most 401(k) investors: lower fees. The total expense ratio, which covers both investment and administrative fees, is 0.066% for individual TSP funds.

The Internal Revenue Service has announced the Thrift Savings Plan (TSP) elective deferral limit for 2023 will increase to $22,500 per year.

The IRC § 402(g) elective deferral limit for 2023 is $22,500. This limit applies to the traditional (tax-deferred) and Roth contributions made by an employee during the calendar year.

Taking a loan from your TSP is a bad idea. The money you're putting into your TSP is for retirement, not for buying a new car. If you leave federal employment with an outstanding TSP loan you have to pay back the full loan balance within 90 days.

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.

Many participants choose to keep their money in the TSP because of the TSP's low-cost funds. And you can always move money into your TSP account by making rollovers from eligible employer plans and from traditional IRAs. You always control how your money in the TSP is invested, even if you aren't making contributions.

How long will 500k last in retirement? ›

According to the 4% rule, if you retire with $500,000 in assets, you should be able to take $20,000/ yr for a 30-year or longer. Additionally, putting the money in an annuity will offer a guaranteed annual income of $24,688 to those retiring at 55.

Average TSP account balances for Uniformed Service Members crested over $40,000 by the end of 2021, while balances for new 'Blended Retirement System' (BRS) participants reached close to $10,000 in just four years since the BRS became operational.

There are 3.6 million Federal Employees Retirement System participants, with an average account balance at the end of 2020 of $164,000.

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%).

The first 3% is matched dollar-for-dollar by your agency or service; the next 2% is matched at 50 cents on the dollar. This means that when you contribute 5% of your basic pay, your agency or service contributes an amount equal to 4% of your basic pay to your TSP account.

The primary difference between Roth and traditional TSPs is how they're taxed. Specifically, a traditional TSP is better if you want to leverage your account to decrease your current income taxes and pay for withdrawals during retirement.

Your best bet is to stick with the C, S and I Funds. Here's the ratio we recommend for your portfolio: 80% in the C Fund, which is tied to the performance of the S&P 500. 10% in the S Fund, which includes stocks from small- to mid-sized companies that offer high risk and high return.

As a general rule, short-term money should be in more conservative investments like the G and F funds. Long-term money should be in more aggressive funds like the C, S, and I. These aggressive funds are going to be the key to doubling your TSP overtime.

Risks. Your investment in the C Fund is subject to market risk because the prices of the stocks in the S&P 500 Index rise and fall. By investing in the C Fund, you are also exposed to inflation risk, meaning your C Fund investment may not grow enough to offset inflation.

To contribute the 2023 maximum annual amount for both regular TSP and TSP Catch-up for a combined total of $30,000, you should enter one election amount of $1,154 into myPay during December 4 – 10, 2022, and your election should be effective on December 18, 2022, the first pay period for 2023.

Does TSP still grow after retirement? ›

Yes, you are able to stop TSP withdrawals at any time and many people do take more from their TSP between when the FERS Supplement stops and when they start Social Security. Also, your TSP can continue to grow even when you are taking withdrawals.

Rules for age-59 ½ withdrawals

You may only take up to four age-59 ½ withdrawals per calendar year. If you have two separate TSP accounts—a civilian TSP account and a uniformed services account—you can only make age-59 ½ withdrawals from the account associated with your active employment at the time of your withdrawal.

Another reason to consider a rollover is because of withdrawal options. One of the biggest downsides to the TSP is that it limits how you can take money out in retirement. In many cases, these limits won't present an issue. But if you need more flexibility, a rollover may be necessary.

With traditional TSP, your contributions go into the TSP before tax withholding, which can potentially lower your current income tax rate. But when you take money from your traditional TSP, you'll pay taxes on both your contributions and earnings at the income tax rate of the year you make the withdrawal.

In November, the I Fund was the best-performing TSP stock fund since April 2020. Without a doubt, stock fund performance in 2023 might be challenged.

The C Fund is a heavily diversified investment but it does come with the risks. The C Fund is moderately volatile and is subject to market risk as the price of stocks in the S&P 500 Index rise and fall. Further, you are exposed to inflation risk if your C Fund investment does not grow enough to offset inflation.

AFIFX is often the most aggressive of the American funds, yet it's still slightly less volatile than the S&P 500. The fund has topped the index by an average of 76 basis points (a basis point is one one-hundredth of a percent) per year over the past 15 years.

The answer is different for everyone. Depending on how long and aggressively you've been invested, you may have enough assets accumulating where you should consider moving into a more defensive position. For others, perhaps they've not saved enough or invested aggressively enough and need to maximize their returns.

The C Fund can be useful in a portfolio that also contains stock funds that track other indexes such as the S Fund and the I Fund. By investing in all segments of the stock market (as opposed to just one), you reduce your exposure to market risk. The C Fund can also be useful in a portfolio that contains bonds.

The rule of 72 is a great way to estimate how long it will take for your TSP to double. This rule says that if you divide 72 by your average investment return then you'll get how many years it takes to double. For example, if on average you earn 10%/year then your money will take 7.2 years to double (72/10= 7.2).

What is the safest investment in us? ›

What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.

Buy Bonds during a Market Crash

Government bonds are generally considered the safest investment, though they are decidedly unsexy and usually offer meager returns compared to stocks and even other bonds.

Money market mutual funds = lowest returns, lowest risk

They are considered one of the safest investments you can make. Money market funds are used by investors who want to protect their retirement savings but still earn some interest — often between 1% and 3% a year. (Learn more about money market funds.)