How to Become One of Those TSP Millionaires

1.5% of TSP investors are TSP millionaires. Are you one? How can you join this elite group of investors?

Number of TSP Millionaires Declines

The number of people investing in the Thrift Savings Plan (TSP) and who have now accumulated at least a million dollars now stands at 98,523. Almost 100,000 federal employees, federal retirees, or beneficiaries now have at least a million dollars in their accounts.

One investor has just over $10 million dollars. That is the largest TSP balance at the present time.

Are you feeling envious? There are close to 99,000 millionaires in the TSP as of September 30, 2021. 99,000 is a large number, but, keep in mind that is as of the end of August when there were 6,402,933 TSP investors. In other words, only 1.5% of TSP investors are millionaires.

The latest quarter shows there is a decline in the number of millionaires in the TSP. At the end of June, there were 98,879 of these millionaires. At the end of September, this number declined to 98,523. So, it is a small decline but still a decline. A decline in millionaires has been unusual in recent years.

Growing Number of TSP Millionaires Over Time

As the stock market has soared, so have TSP values and individual investors have profited. The increasing number of millionaires may surprise some readers, more than a few of which will quickly tell friends (and in Disqus comments) that a federal employee cannot become a millionaire. Perhaps that was true a few years ago. Times have changed and the TSP has made considerable money for a number of federal employees in the TSP.

Here is a quick summary of how many TSP millionaires there are in the program.

  • January 2012: 208
  • December 2016: 9,599
  • December 2017: 23,962
  • December 2018: 21,432
  • December 2019: 49,620
  • December 2020: 75,420
  • June 2021: 98,879
  • September 2021: 98,523

Of course, most TSP investors do not become millionaires but, combined with an annuity, Social Security, and the TSP, a retired federal employee can live very well with less than $1 million in his or her retirement account.

Here is the breakdown of how many investors fall into different value categories with their TSP accounts.

TSP Millionaires as of September 30, 2021

Account BalanceNumber of ParticipantsAverage Years of Contributions
≥ $1 million98,52328.44

How to Become a TSP Millionaire

As a general rule, the road to becoming a TSP millionaire is easy to explain. But, as easy as it is to explain, it is very hard to do. Emotions and money go hand in hand. Many people see their TSP funds dwindle when the market is down. That is normal.

When you see your stock funds dropping fast, how do you react? Many people start to sell before they lose any more money and put their money into the G Fund. Some will sit tight and ride out the drop in stocks. Some will start to buy the stock funds while they are down.

Anyone can read this article and see how simple it is. When you see your large TSP investment has gone down 20%, read it again and see how simple the explanation is and how hard it is to actually not sell those stock funds.

Putting your money into the G Fund is safe. It has never gone down in value. It also goes up much less than stock funds go up in most years (not all years). Investing in a combination of the C, S, and I Funds (and some in the G Fund), taking advantage of the government matching funds every pay period, and not watching the value of your TSP Funds every day will likely result in your TSP account exceeding your expectations over the length of a federal career.

Real Examples of How to Make Money by Regular Investing

Lyn Alden is an investment researcher with a background that blends engineering and finance. In this article, Ms. Alden has posted charts with investing alternatives that display how your money can grow over time.

For example, assuming an employee makes $100,000 per year, contributes 7% gross salary to the TSP, and receives 5% in agency matching funds, here’s how his or her TSP wealth would grow based on different rates of return.

Annual Rates of Return

10 Years$63k$65k$68k$72k$74.9k$78k$82k
20 Years$135k$149k$164k$182k$201k$223k$248k
30 Years$219k$255k$298k$351k$414k$492k$586k
40 Years$315k$389k$485k$610k$774k$988k$1.27M
How to Become a TSP Millionaire: One Example from Lyn Alden

$22 Million Accumulated by Retired Federal Employee

Some readers contend they cannot accumulate $1 million or more through investing. One retired federal employee who worked at the Internal Revenue Service accumulated $22 million. She retired from the IRS in 1944 with a government pension of $3,100.

She was reportedly a very bitter person. She retired at 50 angry at the agency for not promoting her to a higher position and died at 101, 50 years after retirement. She reportedly led a reclusive existence after retiring, living alone in her apartment on Manhattan’s West Side for decades.

She did not invest in the Thrift Savings Plan which did not exist until several decades after her retirement. She did, apparently, do a lot of research and analysis of balance sheets. No doubt, she was a thorough analyst at the IRS.

Very few people would want to emulate her extreme frugality and lack of human relationships or possess her patience or ability to analyze company spread sheets. Still, accumulating a fortune, even one much less than $22 million, can be done on a relatively small salary.

The real question is: Do you have the self-discipline to do it?

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