2022 TSP Performance So Far: Bad News for Stock Funds

TSP performance in 2022 has been dismal going down to the last few days of December.

TSP Performance Summary for 2022

During the wildest year for the stock market since 2008, individual investors have been doubling down on stocks. Professional stock market investors appear to have bailed out.  That, at least, is the opinion expressed in the Wall Street Journal

The S&P 500 index (the index on which the C Fund in the TSP is based) is on track for its worst year in more than a decade.

In 2008, the C Fund finished the year with a negative return of about -37%. The S Fund had a worse year than that (-38%) and the I Fund went down -42%. If there is good news in that, it looks like 2022 will not be anywhere close to those figures. And, in 2009, the market recovered. The C Fund had a return of almost 27%. The S Fund did even better than that (almost 35%) and the I Fund recovered from a disastrous 2008 with a return of 30% in 2009.

When the stock market closed on December 19, 2022, the TSP core funds had the following year-to-date returns:

  • G Fund: 2.85%
  • F Fund: -11.31%
  • C Fund: -18.63%
  • S Fund: -27.18%
  • I Fund: -14.82%

Back in 2008, the G Fund had a positive return of 3.75% and the F Fund was up 5.45% despite the dismal performance of the stock funds.

TSP Performance in 2022 and December Returns As of December 19, 2022

G Fund0.20%2.85%
F Fund1.08%-11.31%
C Fund-6.35%-18.63%
S Fund-7.72%-27.18%
I Fund-2.85%-14.82%
L Income-1.09%-2.89%
L 2025-1.93%-7.00%
L 2030-3.07%-10.72%
L 2035-3.39%-12.07%
L 2040-3.71%-13.34%
L 2045-3.98%-14.49%
L 2050-4.26%-15.54%
L 2055-5.28%-18.29%
L 2060-5.28%-18.29%
L 2065-5.28%-18.30%

What Happened After Falling Stock Market in 2008?

December is usually a good month for the stock market. The S&P 500 index has gone up in December 73% of the time since 1928. While there are still a few days to go in December, the prognosis for a positive return in December does not look good for TSP investors as the C Fund is down almost 19% for the year.

To possibly cheer up investors who may have been putting more money into the TSP stock funds despite very poor returns on their investment in 2022, here is how the C Fund performed in the five years following the poor performance in 2008.

  • 2008: -37%
  • 2009: 27%
  • 2010: 15.06%
  • 2011: 2.11%
  • 2012: 16.07%
  • 2013: 32.45%

Inflation Hurts Stock Market Investors and Many Working Americans

Obviously, the stock market can and has recovered in the past. The time that may take varies. Those who remained invested did well in the long run. Hopefully, that will prove to be true again after the record books for this year are closed.

Unfortunately, the concerns that have impacted the stock market are still with us. With inflation hitting 40-year highs in 2022, the ongoing war in Ukraine and the growing involvement of the United States, fear of a recession, and the continuing concerns about Covid have not gone away.

The reality is that the full impact of inflation has not fully registered yet. Many people who were in the middle class, as measured by income, are spending more on basic necessities and have fallen below a middle-class standard of living. About 12.7% of Americans who were considered in the upper class of income earners have been pushed down into the middle class. “Single parents, renters, younger adults, those without college degrees, and black and Hispanic households were all more likely to have been pushed out of the middle class by inflation,” according to the Wall Street Journal.

The stock market is probably already being impacted by these issues and these may continue for a while. While inflation is down, it is still registering at 7.1% and higher interest rates are going to put more pressure on all prices, including rent and food. While President Biden tried to reassure voters that inflation would only be “transitory”, economic reality has been much different.

And, while those who receive Social Security and a COLA see an increase of about 8.7% in payments that will show up in January, working federal employees will apparently be receiving an average pay raise of 4.6%. In effect, the purchasing power of current federal employees will be going down more than it is going down for those who have retired.

TSP Highlights from December Meeting

At the December meeting of the Federal Retirement Thrift Investment Board (FRTIB), the following TSP statistics were presented:

  • Hardship withdrawals declined 25% in November. Both hardship and loans are up approximately 50% for the year.
  • Increase attributable to ease of use and the change to the loan program that allows for two general purpose loans
  • TSP contact center is now answering calls promptly. Call volume fell over 8% from October to November.
  • TSP participant interaction via email and live chat continues to increase each month. Live chat volume is up about 35% from the prior month. Email volume has gone up by about 7%.

Kimberly Weaver, Director of the Office of External Affairs reported that Congress unveiled the omnibus budget bill the night of December 19th. It is a 4,100-page bill.

This omnibus bill includes provisions of the SECURE/ERISA/Earn Acts. According to the Wall Street Journal, this would increase the required minimum distribution (RMD) age for retirement accounts to 73 starting on January 1, 2023 and to age 75 starting on January 1, 2033 if it is passed by Congress and signed by the president.

According to Ms. Weaver: “The Senate will vote on this on Thursday which is the day that the bill has to be passed, so the Senate will vote on it and send it over to the House and if the House is not able to accept it, it will get messy very quickly.”

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