Using a Thrift Savings Plan (TSP) for $1 Million Wealth

It’s time to debunk a common myth: government employees can definitely become millionaires with their regular salary! It’s common for workers in the public sector to consider taking their skills to the private sector after gaining experience to start building wealth. But the good news is that public-sector workers can still build significant wealth over their careers—even becoming millionaires in the process.

All government workers have access to a wealth-building vehicle called the Thrift Savings Plan (TSP). Let’s break down everything you need to know about this savings plan and how you can use it to achieve that monumental $1,000,000 net worth by the time you retire!

What is the Thrift Savings Plan?

Government workers are restricted from having a 401(k). As a substitute, they can turn to a Thrift Savings Plan to start savings towards their retirement. The Thrift Savings Plan (TSP) is a retirement plan for federal government employees, active-duty military personnel, and other public-sector workers. State government employees are excluded from TSP plans, so they can use a 457(b) plan as a substitute. Think of the TSP like a 401(k) plan for these specified

segments of workers. It has many similarities to the 401(k), which helps individuals employed by the government and government agencies build wealth.

Did you know that if you fall into this category of workers, you are automatically enrolled in the TSP program? It means that you are already contributing to your retirement simply by being employed! There are strategies, however, to optimize your contributions to grow your TSP account substantially by the time you’re ready to retire.

Traditional TSP vs. Roth TSP

There are two types of TSP accounts: traditional and Roth TSP. A traditional TSP is designed for pre-tax contributions from your paycheck. Money is invested from your paycheck tax-free, and taxes are only paid when you begin to withdraw the funds as early as age 59 ½. Money invested in a Roth TSP is taxed before the contributions, but no tax is due when you withdraw it. The Roth TSP still requires the five-year rule (like a Roth IRA). Investors must wait a minimum of five years after their first contributions before qualifying for tax-free withdrawals on gains.

Your current and anticipated tax rate in retirement helps determine which is the best TSP account to invest your money.

Different Types of TSP Investments

Like 401(k) plans, TSPs grow from contributions from your paycheck. TSP participants can designate a portion of each paycheck to be invested through their TSP account. Here’s a snapshot of the different funds that participants can invest in:

Individual TSP Funds:

·       G Fund - short-term US Treasuries

·       F Fund - index fund that follows the performance of the US bond market

·       C Fund - index that tracks S&P 500 (includes large & medium US companies)

·       S Fund - index that tracks the total market index

·       I Fund - Index tracking international markets in Europe, Australasia, and the Far East

There are also Lifecycle Funds (L Funds) that include a diversified mix of individual funds to match your risk profile.

Refer to the official Thrift Savings Plan website for fund performance for updated returns for each fund.

The Million-Dollar Strategy With Your Thrift Savings Plan (TSP)

If you’re a government worker looking to build wealth for your retirement, then investing a portion of your paycheck in a TSP is one of the smartest strategies. It can even help you surpass $1 million. According to the Federal News Network TSP Millionaires report from October 2025, approximately 190,000 participants enrolled in the program (roughly 2.6% of TSP accounts) have more than $1 million. Compare that to approximately 3.2% of retirees with more than $1 million in 401(k) accounts in the US, according to Investopedia.

Becoming a TSP millionaire isn’t automatic, but it’s certainly possible. Follow these strategies if you want to be a part of this elite group:

1.      Start early - Time in the market beats timing the market. Starting your TSP contributions early allows the power of compounding to work in your favor. For example, investing $500 per month for 40 years at a 7% annual return rate will give you more than $1.2 million when you retire. You only contribute $240,000 over the time period and the total interest earned is nearly $1 million! Compare that to investing for only 30 years and your total balance will be less than half of that (approximately $584,000).

2.      Pick the right investment fund - Each of the TSP index funds has different annual returns. The returns are determined by their investments. For example, the G Fund’s rate of return over the last 10 years is only 2.74%, compared to the C Fund’s 14.60% in the same period. That’s because the G Fund tracks US Treasuries, which is less risky than investing in the C Fund, which tracks US companies in the S&P 500. TSP participants planning to retire soon often prefer less risky investments than employees who have many decades before retiring. Consult with a financial advisor at Paycheck to Wealth to understand your risk profile to determine the best investment.

3.      Take advantage of employer match - did you know that Thrift Savings Plans have an employer match? Your government employer will match your contribution up to 5% of your base pay into your TSP account every year. That’s free money you can use towards building wealth. Read more about the benefits of getting an employer match.

Optimize Your Thrift Savings Plan Strategy With a Financial Advisor

If you qualify for investing in a Thrift Savings Plan account, you can utilize the above strategies to build wealth. Participants can access and manage their own money by logging in to the official Thrift Savings Plan website (https://www.tsp.gov). If you need additional assistance with the best TSP investment strategies, contact us at Paycheck to Wealth to speak with a licensed financial advisor and get on the right track using a Thrift Savings Plan (TSP) for your $1 Million wealth future!