Mild inflation can cause a loss in purchasing power if it is sustained over a long period of time. The good news is that every fund in the Thrift Savings Plan has outpaced inflation. We’ll first look at information from the Bureau of Labor Statistics on how the purchasing power of $100 has eroded over time and we will then look at data from the TSP on how each individual fund has outpaced inflation since its inception.  In doing this we must remain aware that we are looking at what happened in the past, which is not necessarily what will happen in the future.

The Bureau of Labor Statistics has an inflation calculator that will tell you how much money you need today to buy what a fixed amount of money bought in the past.  I chose to use the amount of $100 and to see how much money would be needed in 2016 to buy what $100 would have bought when each of the TSP funds were introduced.  Here’s what I found.


  • I would need $212.18 to buy what $100 would have bought in 1987, the year the G Fund was introduced.
  • I would need $203.75 to buy what $100 would have bought in 1988, the year that the C and F Funds were introduced.
  • I would need $136.10 to buy what $100 would have bought in 2001, the year that the S and I Funds were introduced.
  • I would need $123.42 to buy what $100 would have bought in 2005, the year that the L Funds were introduced.

On the TSP website, in the “forms and publications” section, one can find “Fund Sheets” for each of the five basic funds.  These sheets list how each fund did against inflation from their inception to the end of the most recent calendar year.  The inflation charts compare what $100 would have turned into if it was invested in the fund on the day of the fund’s inception, with how the purchasing power of $100 would have been eroded by inflation.

One takeaway from this discussion about inflation is that we are likely to need more than we think we will need in our TSP.  $500,000 sounds like a lot of money today and would yield an income of $20,000 per year if we follow the popular “4% rule”.  If an employee started saving in the TSP today with a goal of accumulating $500,000 by the time of their retirement in thirty years, if we had inflation like we have had since the inception of the TSP almost thirty years ago, their TSP balance would give them the equivalent of $250,000 in today’s dollars.

And inflation doesn’t stop once we retire; we will want to be able to adjust our TSP withdrawals to keep up with inflation over our retirement.

It’s a good time to repeat an observation that I made in an earlier article, “there’s no such thing as too much money in the TSP.”