1. What is the TSP Growth Equation?

The TSP (Thrift Savings Plan) growth equation calculates the future value of your retirement savings based on compound interest. It helps estimate how much your current TSP balance will grow over time given a constant annual return rate.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( Principal \) — Initial investment amount (USD)
• \( Rate \) — Annual growth rate (unitless, e.g., 0.07 for 7%)
• \( Years \) — Investment period in years

Explanation: The equation accounts for compound growth, where earnings are reinvested to generate their own earnings.

3. Importance of TSP Growth Calculation

Details: Understanding potential TSP growth helps with retirement planning, contribution decisions, and assessing whether your savings are on track to meet your retirement goals.

4. Using the Calculator

Tips: Enter your current TSP balance as Principal, estimated annual return rate (historical average is ~7% for C Fund), and years until retirement. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's a realistic growth rate for TSP?
A: The historical average is about 7% for the C Fund (S&P 500), but actual returns vary year to year.

Q2: Does this account for regular contributions?
A: No, this calculates growth of a single principal amount. For recurring contributions, use a future value calculator.

Q3: How does inflation affect this calculation?
A: The result is in nominal dollars. For real (inflation-adjusted) growth, subtract inflation rate from your growth rate.

Q4: Are TSP earnings taxed?
A: Traditional TSP grows tax-deferred (taxed at withdrawal). Roth TSP grows tax-free if rules are followed.

Q5: How often does TSP compound?
A: TSP compounds daily, but this calculator uses annual compounding for simplicity (difference is minimal).