Thrift Savings Plan Monthly Update for December 2023, by Jennifer Meyer, CFP®, ChFEBC℠, AIF®
What a difference a year makes! For my regular readers, you will recall that this time last year you (and your TSP), had suffered through the worst bear market since the Great Recession of 2008-2009. It was an extremely unusual year in that both stocks and bonds posted negative returns for the year. In my 2022 year-end summary, I noted that it is highly unusual for the market to be negative two years in a row. I encouraged you to be disciplined and stick to your investment strategy (assuming you had one). It is always my preference to write happy year end summaries; fortunately, 2023 will allow me to do just that.
The markets had a remarkable year, demonstrating again why the most important factor in long-term investment success is time IN the market, not timing the market. The S &P 500, which is very similar to the C fund, finished the year with positive returns for the final 9 weeks of the year, propelling it to the best performing fund of the year of the five core funds (G, F, C, S, and I are the 5 core funds in TSP). The 2023 return for the C fund was 26.25%. Notably, it was followed very closely by the S fund which stunningly put together two consecutive months of over 10 percent returns in both November and December. The S fund returned 25.30% for the year. The I fund was not far behind with a very respectable return over 18%.
For the most part, no one predicted such a strong turnaround in 2023. Rather, many economists warned of a looming recession in 2023 due to the aggressive interest rate hike cycle the Federal Reserve began in 2022. As 2023 wore on, it became clear that the global economy was in fact holding up quite well in spite of higher interest rates. Certainly, there are parts of the economy, notably housing, that have showed signs of slowing. However, the unemployment rate has remained low, and inflation has subsided. This has led many to believe that not only is the Federal Reserve done hiking interest rates, but also that there is potential for interest rate cuts in 2024. In many ways, this potential played a big role in the stellar returns in the last two months of 2023.
When I meet with federal employees, I emphasize that the successful management of your TSP can have an incredibly positive impact on your retirement. As we start a new year, PLEASE do not delay becoming educated as to how the maximize this critical component of your retirement. If you have questions on how to best manage your TSP, please schedule a complimentary meeting or attend a TSP webinar. You can find the schedule at stwserve.com/register.
Monthly and year to date returns effective December 31, 2023, and longer-term averages are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 4.24% | 5.15% | 25.93% | 25.04% | 17.59% |
| 2023 YTD | 4.22% | 5.58% | 26.25% | 25.30% | 18.38% |
| 2023 Monthly | |||||
| December | 0.39% | 3.72% | 4.54% | 10.45% | 5.39% |
| November | 0.41% | 4.51% | 9.12% | 11.19% | 8.54% |
| October | 0.40% | -1.58% | -2.10% | -6.26% | -3.22% |
| September | 0.35% | -2.54% | -4.77% | -4.90% | -3.51% |
| August | 0.35% | -0.63% | -1.58% | -4.06% | -3.90% |
| July | 0.34% | -0.07% | 3.21% | 5.91% | 2.82% |
| June | 0.32% | -0.36% | 6.61% | 8.31% | 4.57% |
| May | 0.31% | -1.10% | 0.43% | 0.44% | -4.01% |
| April | 0.30% | 0.61% | 1.56% | -2.18% | 2.87% |
| March | 0.35% | 2.55% | 3.67% | -2.90% | 3.11% |
| February | 0.28% | -2.58% | -2.44% | -1.63% | -2.84% |
| January | 0.34% | 3.25% | 6.28% | 10.82% | 8.43% |
Month to month trends as shown above are interesting, but it is important to remember that short term market volatility is to be expected and employees should not be making investment decisions based on short term performance. Following are longer term rates of return for each fund, as of December 31, 2023. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 4.24% | 5.15% | 25.93% | 25.04% | 17.59% |
| 3 Year | 2.86% | -3.15% | 10.26% | 1.47% | 4.14% |
| 5 year | 2.36% | 1.21% | 15.84% | 12.09% | 8.60% |
| 10 year | 2.32% | 2.03% | 12.08% | 8.69% | 4.66% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
Also, a final reminder that new contribution limits for 2024 are in place. The regular contribution limit for employees under age 50 is increased to $23,000. The catch-up amount for employees over age 50 remains at $7500. For employees over age 50, the total contribution amount is $30,500 for 2024. An employee who is over age 50 and wishes to max out their contribution would increase the bi-weekly contribution to $1,173 per pay.
Please reach out to us with questions and follow our website for the most recent updates. We are here to serve you! Thank you for your service to our government!
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Jennifer Meyer, CFP®, ChFEBC℠, AIF®
A seasoned financial advisor, Jen is renowned for her expertise in federal benefits and financial planning for feds. Jen’s nearly 30-year industry background coupled with her CERTIFIED FINANCIAL PLANNER™ and Chartered Federal Employee Benefits Consultant℠ designations empower her to guide clients confidently on the path to financial independence. Growing up in a family of federal employees, she’s incredibly proud to serve the federal community. Known for her empathetic approach and deep understanding of economic impacts on planning, Jen is dedicated to her clients’ financial prosperity.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
**Written by Jennifer Meyer, CFP®, ChFEBC℠, AIF®,. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
***The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you're eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.***
