It’s been a good decade, and a great past year for well-tenured participants in the federal government’s Thrift Savings Program as the ranks of TSP millionaires has skyrocketed.
The number of TSP participants with $1 million or more in their accounts soared from 27,212 in March 2020 to a record 84,808 as of March 31, 2021.
The number of millionaires increased 12.4% since the end of 2020. There were 75,420 TSP millionaires at the end of 2020. Looking back a decade, there were a mere 208 TSP millionaires back in 2011. On average, TSP millionaires have been contributing to their plans for 28.5 years.
The largest TSP account balance the end of March 2021 was an astounding $9,318,238, which is up from “just” $6.3 million March 2020. Not a bad year of retirement plan growth, particularly considering the challenges presented by the COVID-19 pandemic.
According to an April 8 report on Federal News Network, the vast majority of TSP millionaires got there by investing steadily in the C, S and I funds. The C fund tracks the S&P 500 index, the S fund is invested in the rest of the U.S. market and the I-fund is in international stocks.
The S fund alone gained nearly 32% in value in 2020, and as of April 8, was up 10.52% so far in 2021, according to FedSmith.com’s TSP Data Center. That’s despite being down slightly (-0.39%) in March. The C fund isn’t far behind, up 9.54% so far this year (and up 4.38% in March), while the I Fund is next, up 6.14% (up 2.35% in March).
The I Fund grew 8.17% in 2020, despite a tumultuous year with the Trump Administration successfully putting a halt to a plan to invest billions of I Fund dollars in a new index fund that includes some Chinese state-owned military and intelligence companies.
Because the S Fund is passively managed, it remains fully invested during all market cycles and economic conditions. Small cap stocks, while more volatile, have historically outperformed large cap stocks. In 2020 in particular, S Fund investors were well rewarded for taking this extra risk.
As of Dec. 31, 2020, the TSP, the largest defined contribution plan in the world, had 6.2 million participants with $710 billion in invested assets. It was the first time the TSP crossed the $700 billion threshold with the Federal Retirement Thrift Investment Board attributing the milestone to contributions from a growing number of uniformed services members joining the plan for the first time.
SEE ALSO:
- 3 Ways to Get TSP Participants to $1M
- TSP Core Funds Show Strong Gains in 2020
- More Weak 401k Criticism Doesn’t Stand Scrutiny
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
