How Many Millionaires Are There in the TSP?

View this article online at https://www.fedsmith.com/2018/01/25/many-millionaires-tsp/ and visit FedSmith.com to sign up for free news updates
By on January 25, 2018 in Pay & Benefits, Retirement with 0 Comments

Golden medal labeled with '1,000,000' and a dollar sign depicting an achievement of becoming a millionaire

Rapid Growth of TSP Millionaires

At the end of December 2016, there were 9,599 millionaires in the Thrift Savings Plan. Since then, with the rising stock market, the number of millionaires has exploded.

The latest number of millionaires, as of the end of 2017, is 23,962 – an increase of almost 150% from two years ago. The average TSP millionaire has been contributing to the program for 28.87 years. The data are provided by Kim Weaver, Director, Office of External Affairs for the Federal Retirement Thrift Investment Board (FRTIB).

This is a small percentage of more than five million TSP participants (about 0.48%) but still an impressive number.

As noted by MarketWatch,  the stock market has been on a tear in recent months:

On the one-year anniversary of Donald Trump’s win in the U.S. presidential race, the Dow Jones Industrial Average is showing its biggest post-Election Day gain in more than 70 years.

The Dow DJIA, +0.16%  has advanced 28.50% since Nov. 8, 2016. That represents its best performance after a White House contest since 1945, when the blue-chip gauge was up 29.83% in a year following the election of Franklin D. Roosevelt….

The number of TSP millionaires was only 208 back in January 2012. In most years, with the exception of one year, the number of millionaires has been growing rapidly. For a broader perspective, this is an increase of 11420% in the number of TSP millionaires since January 2012.

The Growing Number of Millionaires by Year

Here is a chart displaying the growing number of millionaires in this popular program:

Date Number of TSP Millionaires
December 2017 23,962
December 2016 9,599
February 2016 3,272
February 2015 4,167
December 2013 1,695
March 2013 562
January 2012 208

Line chart showing the growth in the number of TSP millionaires from January 2012 to January 2018

Breakdown of Account Balances

The highest TSP balance as of December 31, 2017: $6,215,819.

Account Balance Number of Participants Average Years of Contributions
< 50,000k 2,874,010 6.83
$50k-$249k 1,458,820 16.32
$250k-$499k 453,353 21.83
 $500k-$749k  148,271  24.78
 $750k-$999k  54,735  27.17
 = or >$1 million  23,962  28.87
 Total  5,013,151  11.80

Becoming A Millionaire Involves Taking Managed Risks

Becoming a millionaire involves taking some risk. The safest investment in the TSP is normally considered to be the G fund. It never loses money, but it does lose out to inflation which can cost retirement savers a lot more money over their career.

Taking a look at the annual returns of the G fund for the past six years, the highest annual return was 2.45% in 2012. The highest annual return for the C fund during this same time period was 32.45% (in 2013).

We do not know how each of these 23,962 TSP millionaires invested their money. Some may have a small percentage of their investment money in the G fund as a safety net. However, it is also more likely that their investments are largely in the TSP stock funds because of the much better rate of return. Based on anecdotal evidence in emails sent in from readers who have reached the $1 million dollar TSP club, that is the case for these investors who are willing to take some risk and stay invested for the long haul.

Keep in mind there are risks though. The C fund lost almost 37% in 2008 while the G fund was up 5.45% for the same year. Staying invested during a down market can be emotionally difficult. Some investors dumped their TSP stock investments after the market dropped, effectively locking in their losses and missing the ride back up over the last decade. We can be reasonably certain these TSP participants are not part of the millionaires club.

Here is a note of encouragement in an email we recently received from a reader who has achieved the million dollar TSP club:

I’ve enjoyed reading your articles and (contrary to our secretary) I encourage our new employees to utilize the TSP system. In 1987, the TSP was just being introduced and my manager called me into his office to tell me about the program; he said, “If you invest in this right now as this raise takes effect, you will never miss the money and you will retire a millionaire!” When our new employees hear that I have a million in TSP, they are more eager to sign up.

Our congratulations to those TSP investors who have reached this significant milestone of accumulating at least $1 million in their TSP fund.

© 2018 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

Tags:

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47

Top