How To Get The Most Out Of Your TSP

Ask a room full of federal employees how to make the most of their Thrift Savings Plan (TSP), and you’re bound to hear the same advice repeated like gospel: "Contribute at least 5% of your salary to get the full government match." And while that advice is solid—it’s just the tip of the iceberg.

To truly unlock the full potential of your TSP and set yourself up for a financially confident retirement, you’ve got to go deeper. That means understanding the nuances of each fund, the long-term performance trends, and the lesser-known strategies that can either boost your nest egg or quietly drain it.

The Funds: More Than Meets the Eye

Let’s start with the basics. Most federal employees are familiar with the G Fund—the government securities investment fund. It's often touted as the "safest" option because it never has a negative return. Sounds great, right? But here’s the catch: while it avoids losses, it also largely avoids growth. Over the last decade, its average return has hovered around a mere 2.36%. That’s not just low—it’s dangerously close to being outpaced by inflation.

Now consider this: the average retiree pulls about 5% annually from their retirement accounts. If you're earning 2.36% and withdrawing 5%, you’re effectively losing purchasing power year over year. Combine that with inflation, and your retirement funds could erode faster than you planned.

The G Fund might make sense in the twilight years of your career, when stability outweighs growth. But if you stick with it throughout your working life? You may never accumulate enough to sustain your retirement lifestyle.

The F Fund, which is composed of over 11,000 bonds and notes, doesn’t offer much solace either. It was once viewed as a counterweight to the stock market—bonds go up when stocks go down, in theory. But the reality? It’s averaged only 1.39% over the past 10 years, and in 2022, it tanked alongside equities with a 12.83% drop. For a supposedly “stable” option, that’s a hard pill to swallow.

Even Lifecycle Funds—which automatically diversify across all TSP funds—don't rely heavily on the F Fund. That says a lot.

Stock Index Funds: Where the Real Growth Happens

If you’re serious about growing your TSP, the C, S, and I Funds deserve your attention. These are stock index funds—volatile, yes—but historically, far more rewarding.

Here’s a breakdown:

• C Fund (S&P 500): Large to mid-sized U.S. companies.
• S Fund: Small to mid-sized U.S. companies (not the same as the famous Dow).
• I Fund: International companies across 40 developed and emerging markets.

When it comes to returns, the C Fund shines:

• C Fund: 10.88% average return since 1988
• S Fund: 8.87% average since 2001
• I Fund: 5.09% average since 2001

Even in market downturns, the C Fund holds up better:

• In 2008, C lost 36%, I lost 42%
• In March 2020, C dipped 12%, S plunged 21%
• In 2022, C declined 18%, S dropped 26%

It’s clear: the C Fund delivers solid growth with comparatively lower volatility. The S and I Funds may hit occasional home runs, but the C Fund wins with consistency.

Lifecycle (L) Funds: Easy, But Not Always Optimal

The L Funds are the TSP’s version of autopilot. They shift allocations over time—from aggressive in your early years to conservative near retirement. Sounds perfect, right? Except, they include all five funds, even the underperforming ones.

That means even if you’re close to retirement, part of your money might still be parked in the F or I Funds, which historically underdeliver. Why not just focus on the winners?

A Smarter Strategy: C + G Allocation by Age

Federal Employee Benefit Advisors (FEBA) suggest a hybrid approach—one that blends the growth potential of the C Fund with the stability of the G Fund, tailored to your age.

This approach mirrors the intent of the L Funds—be aggressive early, conservative later—but it narrows your exposure to only the two most efficient options.

Modern Withdrawal Rules: Don’t Miss This Opportunity

Thanks to the TSP Modernization Act of 2017, you’re no longer limited to a single in-service withdrawal during your federal career. Once you hit age 59.5, you can make up to four withdrawals per year, penalty-free—provided you roll them into an IRA or Roth IRA.

Here’s why this matters: the TSP isn’t ideal for withdrawals. The G Fund can’t keep up with inflation, and the stock funds may be down when you need cash. Instead, consider transferring your balance to a private sector IRA where you can control your investment mix and access more robust income strategies.

Next Steps: Learn From the Pros

Navigating these choices alone can be overwhelming. That’s why FEBA hosts a monthly webinar called “TSP Maximization.” In just an hour, you’ll learn:

• The top two private-sector investment options to replace TSP
• How to transition out of TSP strategically
• Ways to continue contributing and earning your federal match while reallocating your balance

Each session includes a live Q&A, so you can get real answers to your real questions.

Bottom line: Contributing 5% for the match is a great start—but it’s just that—a start. With deeper understanding and smarter strategy, your TSP can do so much more than just meet the minimum. It can be the foundation of a retirement you actually look forward to.

Register for our free, educational webinar:

Maximizing Your TSP

Jun 26, 2025 | 1-2pm EST + 30-min live Q&A

During the webinar, we’ll cover:

• Latest Government Downsizing Updates
• Retirement Benefit Eligibility Requirements
• Understanding the TSP basics.
• C, S, I, F, & G funds explained.
• Learning about contribution limits and strategies. Roth vs. Traditional. When/how to withdraw. Plus more!
• How to maximize TSP utilizing the Age-Based In-Service withdrawal.
• Forms needed for retirement: The forms you need for retirement vary depending on your specific situation and the retirement system you’re a part of within the federal government.
• 30-min interactive Q&A session

Register Here