Thrift Savings Plan: What Funds Should I Pick?
- Kirk Reagan
- Feb 11
- 3 min read
Updated: Feb 12
For military members and federal employees, the Thrift Savings Plan (TSP) is one of the most powerful tools you have for building long-term financial security. Yet, after years of working with service members and civilian employees, I’ve seen the same pattern: the TSP is often misunderstood, underutilized, or even ignored.
I recently recorded a short video breaking down the TSP, its fund choices, and how to think about your contributions. You can watch it here: 👉 Thrift Savings Plan (TSP) Explained on YouTube
What Is the TSP?
The TSP is a defined-contribution retirement plan, much like a 401(k) in the private sector. It’s available to:
All active duty service members (including Reserves and Guard)
All federal civilian employees
Think of it as your personal retirement account, where you can choose how much to save and where those savings are invested.
The Common Mistake: Picking the Wrong Fund
One of the stories I shared in the video is about someone who spent 20 years investing only in the G Fund—thinking “G” stood for “government” and that it was the right place for their money. In reality, that decision cost them decades of growth potential.
This isn’t uncommon. The TSP offers multiple fund options—G, F, C, S, I, and Lifecycle (L Funds)—each with its own risk and return profile. Picking the wrong one for your situation can mean the difference between a comfortable retirement and falling short.
Fund Options at a Glance
G Fund: Government securities—safe but very low growth
F Fund: Fixed income (bonds)
C Fund: Mirrors the S&P 500 (large U.S. companies)
S Fund: Small/mid-sized U.S. companies
I Fund: International companies (recently expanded to include emerging markets)
L Funds: Pre-mixed “target date” funds that rebalance automatically
Understanding these funds is step one. Step two is knowing how much to contribute and whether to use Traditional (pre-tax) or Roth (after-tax) TSP contributions.
Which Funds to choose
When choosing TSP investments, I encourage service members and federal employees to think in terms of growth, balance, and time horizon. For most people, putting all of your contributions into the G Fund is too conservative—it may keep your money safe, but it likely won’t keep up with inflation over a 20–30 year retirement horizon.
If you want to keep things simple and stay fully in equities, one option is to select the Lifecycle (L) Fund with the furthest target date available. The lifestyle funds stay in >99% equities until the 30 years prior to the target date. That way, your contributions are invested primarily in the C, S, and I Funds and are regularly rebalanced for long-term growth.
Lifecycle funds automatically rebalance over time, giving you a mix of stocks and bonds without much hands-on management. They will gradually increase the G and F fund holdings 30 years before the target date. But there’s an important caveat: about five years before the target date, the L Funds start shifting much more heavily into conservative allocations. That may or may not fit your personal retirement timeline. When you get close to that point, it’s worth revisiting whether the default glidepath is still appropriate for you.
For those who want to be more hands-on, you can choose your own balance of individual funds. However, make sure they are staying within the balance you desire as market returns begin to shift the percentages in your account.
Your exact mix should reflect your age, risk tolerance, outside investments and retirement timeline, but the key is to move beyond the G Fund and take advantage of the TSP’s low-cost equity exposure. If you’d like to work on what would work best for you, please reach out and Schedule a Call.
Final Thoughts
Your TSP isn’t just another paycheck deduction—it’s one of the most important retirement benefits you’ll ever have. By understanding the fund choices and making intentional decisions, you can put yourself on the path to long-term financial success.
Comments