WASHINGTON, D.C. – The Thrift Savings Plan (TSP) saw strong growth in its stock-based funds in 2023, which helped to propel the average account balance for federal employees and retirees back to levels similar to those before the losses experienced in 2022. The average account balance reached around $175,700 for those under the Federal Employees Retirement System (FERS) and $197,300 for those under the Civil Service Retirement System (CSRS) by the end of 2023, according to data released during the January meeting of the TSP governing board.
In 2022, the average balance for FERS account holders, which includes both active and retired individuals under that system, dropped to about $157,000 from approximately $181,000 at the end of 2021. Meanwhile, the average account for CSRS account holders, mostly retirees, fell to about $175,000 from roughly $195,000.
The TSP attributed most of these gains to investment returns, as the plan experienced a net inflow of about $4 billion. This inflow, however, was partly offset by $44 billion in withdrawals and loan disbursements, which offset $48 billion in new investments and loan repayments.
By the end of 2023, the total investment in the TSP reached an all-time high of $845 billion. This marked a significant recovery from the investment losses experienced in 2022 when the total in the TSP fell to $726 billion from $812 billion at the end of 2021. The number of participants also saw an increase, with about 230,000 new account holders added in 2023, bringing the total to nearly 7 million.
Additionally, data revealed that over 95 percent of FERS employees are investing at least some of their own money, with 87 percent investing at least 5 percent of their salary to capture the maximum government contribution for them. This trend has been on the rise over time, largely due to a policy of defaulting to a 3 percent investment rate for employees hired between 2010 and 2020, which was increased to 5 percent for those hired in 2020 and after.
Other notable developments in 2023 include the increase in account holders with money in Roth status, accounting for $54 billion of the total, and the rise in general-purpose loan usage by 40 percent, with nearly 480,000 loans taken out totaling nearly $5 billion.
These developments highlight the resilience and continued growth of the TSP, solidifying its position as a crucial retirement savings vehicle for federal employees and retirees.