Don’t overreact when the market doesn’t do what you think it should do.

Charles F. Vaughan, PhD, P.E.

I’m a FERS retiree and one of those TSP investors who have accumulated at least $1,000,000 in their TSP account while working as a federal civilian employee. In his article published February 28, 2020 in FEDweek (Becoming a TSP Millionaire: Don’t Try to Time the Market) Dallen Haws noted that “becoming a TSP millionaire is simple” and that at the end of 2019 there were nearly 50,000 federal employees with at least $1,000,000 in their TSP. I’d like to share with you my story of how I accumulated $1,000,000 plus in my TSP account and some of my lessons learned.



In October 1987 I left military active duty service (U. S. Navy) and began working as a Department of the Navy civilian employee under the Federal Employees Retirement System (FERS). I made my first TSP contribution in the amount of $148.08 on July 22, 1988; at that time I contributed 5% to take advantage of the government’s matching contributions. I was, at the time, a GS-11 making about $40,000 a year, married with a wife and two young children. My wife and I thought it was important to invest for the future so I invested 5% of my pay into the TSP. I continued investing in the TSP every payday until my final contribution was made on 8 January 2021 in the amount of $205.34, again 5% of my salary.

In 2003 or 2004 (after investing for about 15 years) I made two important changes to my investment strategy to increase my prospects of retiring with at least $1,000,000 in my TSP. First, I increased my contribution percentage from 5% to 11% and second, I changed my investments from low and medium risk investments (G, F, and C funds) to medium to high risk investments (C, S, and I funds) as shown in the table below where an X indicates a fund I was invested in at that time.

Ten years later I added the G fund back into my portfolio and added one of the Lifecycle funds, the L2020 fund. Four years later I revised my portfolio for the final time as shown in the table.

I invested in the TSP continuously for 32 ½ years. My TSP performance is shown in the graph below with the black line showing my TSP portfolio value versus years of investing. It took me 30 years to obtain a portfolio of $1,000,000. The growth between years 25 and 30 was phenomenal; my portfolio increased in value from $600,000 to $1,000,000 over a period of 5 years. The graph also shows my cumulative contributions to the TSP; over a period of 32 ½ years I invested approximately $260,000 while my portfolio grew to almost $1,400,000.

Lessons Learned

What lessons can I pass along? First, don’t overreact when the market doesn’t do what you think it should do. You can see from my graph that there were times I lost money in my investments. Around the 20 year point, for example, you can see I lost almost one-half of my investment but I did not change my investments or pull out of the TSP.

Second, when I did switch my mixture of funds at year 15 my portfolio began to grow. I don’t have data to show what would have happened if I had not changed my fund mix at that time, but I suspect the growth would have stayed flat like it had been.

Third, as my tolerance for financial risk changed I changed my mix of funds I was investing in. Usually my risk tolerance increased but something happened after 25 years of investing to cause me to go back to the G fund with some of my investments and lower my financial risk. I can’t remember what caused me to go back to the G fund but a few years later I moved my money out of the G fund to higher risk funds.

See also, 2021 GS Locality Pay Tables

Fourth, as Dallen Haws noted becoming a TSP millionaire is simple. Invest every payday and watch your portfolio grow. Evaluate your financial risk tolerance and accept the highest financial risk you are comfortable with.

In Summary

As a FERS retiree I have my FERS pension, social security, and a sizeable retirement nest egg in the TSP. I will likely experience a comfortable retirement in large part because I have a sizeable nest egg. My advice to those still investing in the TSP, and especially to those who are eligible but are not investing in the TSP, is to evaluate your financial risk tolerance and accept the greatest amount of risk you are comfortable with. To make some serious money with the TSP you need to accept the most financial risk you can tolerate. With my current TSP portfolio I’ve made over $100,000 in my investments in the 41 days since I retired.

Charles Vaughan is a recently retired DR-03 of the Department of the Air Force.  He began his government civilian career in 1987 as a GS-11 with the Department of the Navy.  He is not a financial advisor or planner.  His investment experience shows it is possible to accumulate considerable wealth through the TSP even when not making the best investment decisions.

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