I received my annual TSP statement several weeks ago and each year I find it informative. It’s a good tool for evaluating your fund’s performance and comparing it to other investments.  The highlights this year pointed out one of the true benefits of the TSP; the low expense ratio that we pay compared to other private sector funds. In 2012 the expense ratio was only .027%, that’s just 27 cents for every $1,000 in your account. The TSP points out that, “Such low fees are very rare in defined-contribution plans, where the average fee is $8.30/$1,000 account, and in 10% of plans, you’d pay more than $13.80.”

The illustration they use shows the dramatic impact a larger expense ratio has on your investments long term.  A $50,000 investment, over a 30 year period, earning an average 7% a year with an expense ratio of .027% would be worth $377,954. This same account would shrink to $257,842 with an expense ratio of 1.38%. That’s a loss of over $120,000 due to an expense ratio of only 1.38%!  Expense ratios matter. You don’t have other account services fees, fund loads or 12-b1 fees to contend with either. Overall you can’t purchase a lower cost indexed fund than what the TSP offers.

The statement also provides a lifetime TSP single life annuity estimate for age 62 or your current age. You can use this figure to shop around and compare private sector annuities to what the TSP can offer. There are significant differences between plans. If you are contemplating converting your TSP to a private sector annuity READ the fine print. Use the TSP’s online annuity calculator to compare plans before signing on the dotted line.

Many, especially the younger new hires, don’t spend the time they need to fully understand their investment options and how they should invest to maximize their gains. Everyone that has an investment account of any type needs to understand the dynamics to avoid panic moves that could prove costly.  Understanding your TSP investment and withdrawal options, and how to maximize your contributions, can help you realize your retirement savings goals.  If you would like to learn more about investing consider joining the (NAIC) Better Investing and sign up for their free 30 day trial and sample copy of their Better Investing magazine.  I was a member of this organization for many years and found it to be very helpful throughout my career. This organization helps you understand and profit from investing. They have many tools; online and traditional courses, local chapters, and investment clubs that teach you the fundamentals and how to invest wisely.

Use the TSP’s annual report as a reminder to reevaluate your current investment mix. Those close to or in retirement that will need to withdraw funds from their TSP account, should consider having the majority of your account in the L Income or G fund.  The L Income fund invests 74% in the G Fund, 12% in the C , 6 % F, 3% S and 5% I and the fund is rebalanced daily to maintain that mix.  Over the past three years the L Income Fund has earned a 4.2% return, not bad considering the low interest rates now available for CDs and Treasuries.

If you are uncomfortable with investing and fear the potential price fluctuations associated with equities (stocks), then the G-Fund is a safe haven to consider. The G Fund assets are managed internally by the Federal Retirement Thrift Investment Board. The G Fund buys a nonmarketable U.S. Treasury security that is guaranteed by the U.S. Government. This means that the G Fund will not lose money. With interest rates at historic lows the G-Fund still earned 1.47% in 2012, more than double what you can earn on a CD today.

Recent Forum Host Articles:

• 1099R Statements, Replacement Copies, & Upcoming Changes by Dennis Damp
• IRA Contribution Limits Rise for 2013 by Paul Risser
• TSP Roth Conversion Update by Dennis Damp
• Making Retirement Savings Last by Paul Risser
• TSP ROTH Conversions, Benefits and Limitations by Dennis Damp

Request a Retirement Benefits Summary & Analysis from a local adviser. A sample analysis is available for your review. Includes projected annuity payments, income verses expenses, FEGLI, and TSP projections. This service is not affiliated with www.federalretirement.net.

Learn more about your benefits, employment, and financial planning issues on our site and visit our Blog frequently at  https://fedretire.net to read all forum articles.

Visit our other informative sites

• Federal Government Jobs & Career Center
• FREE Federal Employee’s Retirement Planning Guide
  • Federal Retiree Job Opportunities
  • Federal Employee & Retiree BLOG
• Federal Employee’s Career Development & IDP Center
• Post Office Jobs & Career Center
• Job Search – All Sectors
• Environmental Health & Safety Jobs Center
• Nuclear Jobs & Careers – High Paying Jobs
• Stolen Car Plates & Recovery Guide
• Take Charge of Your Federal Career
• The Book of U.S. Government Jobs

• 2013 Excel Leave Chart (target 2013 retirement dates and determine exact leave balances for each date)
• How to be Emotionally and Physically Prepared When You Retire
• How to be Financially Prepared When You Retire
• Master Retiree Contact List (Important contact numbers and information)
• Survivor’s Guide
• Estate Planning Guide (An 11 part series that will help readers prepare for retirement, understand basic estate planning techniques, and compile their personal “Survivor’s Guide” binder.)

The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice. Our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change.

Last 5 posts by Dennis Damp

• Can Federal Retirees Reach the 0% Tax Bracket? - July 11th, 2026
• Federal Retirement 5-Year Rule: What Employees Need to Know - July 4th, 2026
• TSP Loan Pros and Cons: Understanding the True Cost - June 27th, 2026
• G Fund Guide: Is It the Right TSP Investment for You? - June 20th, 2026
• Early Retirement Guide for Federal Employees - June 13th, 2026

Dennis Damp

Dennis V. Damp is an author, retired federal manager, business owner, career counselor and veteran. Damp is the author of 28 books, a recognized benefits expert, and a retired federal manager with 35 years’ service. Dennis has been a guest on hundreds of radio talk shows, CNN’s YOUR MONEY and the Lou Dobbs Cable TV shows, lectured at universities and colleges, produced Internet web sites and training videos, and has written hundreds of articles for national magazines and newspapers. His books have been featured in the Wall Street Journal, Washington Post, New York Times and U.S. News & World Report.

Dennis joined the Air Force in 1968 and spent over three years on active duty and an additional seven years with the Air National Guard. He was hired by the Department of Defense (DOD) after leaving active duty and transferred to the Federal Aviation Administration (FAA) in 1975. He spent the remainder of his career in various positions with the FAA. His last position was technical operations manager at the Pittsburgh International Airport’s air traffic control tower.