What a difference a decade makes. As recently as 2011, there were only 208 people with at least a million dollars saved in the U.S. government’s Thrift Savings Plan (TSP)—the largest defined contribution plan in the world.
A decade later, there are almost certainly more than 100,000 TSP participants with seven-figure retirement account balances. Federal News Network reported on Aug. 12 that there were 98,879 TSP millionaires—federal workers with at least $1 million in their DC accounts—as of June 30, 2021. That’s up from just 45,219 in June 2020 and 84,808 as of March 31, 2021. As recently as 2016, there were only 9,599.
The TSP provides regular three-month performance updates of these figures. That most recent June 30 update found that in addition to the current millionaires, there were many near-TSP-millionaires—99,708 participants—with balances between $750,000-$999,999.
With that many TSP participants being on the verge of joining the million-dollar club, their contributions and government matching contributions plus the stock market’s performance since June (DOW up 1122.89 from July 1-Aug. 16) has likely pushed at least an additional 1,121 over the seven-figure mark and quite probably many more—although that won’t be officially confirmed until the TSP’s next report at the end of September.
In it for the long haul
There is plenty of revealing information about TSP participants within a simple chart provided in the TSP reporting, which shows account balance ranges, number of participants within each range, and the average number of years they have been contributing to the TSP.
For instance, there were 6,134,105 total TSP participants as of June 30, 2021, and the average years all participants have been contributing to the federal government’s defined contribution plan is 10.68 years.
As for the already-TSP millionaires, it has taken them an average of 28.28 years to hit and surpass $1 million, while those in the $750,000-$999,999 range have spent an average of 25.23 years contributing to the plan.
The largest TSP account balance, as of June 30, 2021, was $10,019,916 according to FedSmith, and was likely aided by a large rollover from an outside 401k.
Not surprisingly, more than half of the plan’s total participants—3,663,973—have account balances of less than $50,000, but they’ve only been contributing for 5.77 years on average.
And about one-quarter of participants (1,529,078) fall in the $50,000-$249,000 range, but they’ve contributed for an average of 15 years.
To complete the grid, 530,357 participants have account balances ranging from $250,000-$499,000 (20.36 years contributing on average) and 212,110 participants are in the $500,000-$749,000 range (23.12 years on average).
Recent TSP fund performance
The FNN story notes that most TSP millionaires got their “the old-fashioned way: Investing the maximum allowed in their 401k plan, getting the government match and investing mostly in the stock indexed C, S and I funds,” which are classified as medium- to high-risk investments while the G and F funds are lower risk.
A strong 2020 swelled the TSP millionaire ranks, with the S Fund alone gaining an impressive 31.85% in value and the C Fund gaining 18.31%.
The (international) I Fund grew 8.17% in 2020, despite a tumultuous year. The F Fund gained 7.5% in 2020 while the G Fund gained a slight 0.97%.
How are the funds doing so far this year? The TSP’s various funds had a pretty good July, with only the S Fund, composed of small- and mid-sized businesses, in the red for the month with a decline of 1.24%. For the year, it’s still up 14.04%.
The common stocks of the C Fund gained 2.37% in July and is up an impressive 17.98% year-to-date.
The I Fund, which represents the stocks of companies in many developed countries (excluding the U.S.), gained 0.72% in July, bringing its gains so far this year to 9.77%. And the F (fixed income) Fund increased 1.15% in July, but still remains in the red by 0.37% in 2021.
The G Fund, composed of government securities, grew by its statutorily mandated 0.13% in July. So far in 2021, the G Fund has increased a modest 0.77%.
All of the TSP’s target-date-like lifecycle (L) funds gained value in July, ranging from the L Income Fund’s 0.47% gain to 1.26% gains for the L 2060 and L 2065 funds.
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