Federal employees are finally seeing their back pay processed, bringing a collective sigh of relief. However, a critical detail regarding the Thrift Savings Plan (TSP) has emerged that reveals a permanent financial scar from the 43-day shutdown. As reported by FEDweek, while the government will deduct your missed TSP contributions from your retroactive pay, it will not compensate you for the investment earnings you missed during the delay.
This distinction is vital. While your principal (the money you put in) will eventually land in your account, the growth that money would have earned between October 1 and mid-November is lost forever. In a year where the market has shown volatility and growth, this “opportunity cost” is a silent penalty on your retirement savings.
The Mathematics of “Lost Opportunity”
To understand the impact, we must look at what happened in the market while paychecks were frozen. During the shutdown period (October 1 through mid-November), the stock market did not stand still.
Sound Data: The Cost of Being on the Sidelines
- October Gains Missed: In October 2025 alone, the C Fund (S&P 500) posted a gain of 2.34%.
- The Compound Effect: If you normally contribute $1,000 per pay period, and you missed two pay periods in October, that is $2,000 that sat in government limbo rather than growing in the market. Missing a 2.34% jump on $2,000 means you missed out on roughly $47 of immediate growth.
- Guaranteed Loss: Even if you are invested in the safe G Fund, you lost money. The G Fund accrues interest daily. By delaying your contribution for 43 days, you missed 43 days of guaranteed interest that can never be paid back.
- Long-Term Impact: While $50 or $100 sounds small, the power of compound interest makes it significant. That missing growth, had it been invested and allowed to grow at an average 7% over 20 years, would multiply significantly. When applied across the entire federal workforce of 2 million people, this represents millions of dollars in lost retirement wealth that will never be recovered.
The government’s policy treats your TSP contributions as simple cash storage, ignoring the time-value of money that is central to investing.
Restoring Your Retirement Trajectory
Since the government will not make you whole on these lost earnings, the responsibility falls on you to recover that ground. You cannot change the past 43 days, but you can aggressively optimize your strategy for 2026 to offset this loss.
This is where Internal Benefit Advisors provides essential value. We help you move from a passive participant in the TSP to an active manager of your financial future.
Here is how we help you recover:
- Strategic “Catch-Up” Planning: With the 2026 TSP contribution limit rising to $24,500 (plus an $8,000 catch-up for those 50+), we can help you adjust your payroll deductions to “supercharge” your account in the coming months, effectively buying more shares to make up for the lost time.
- Allocation Review: Did you miss out on C Fund gains? We analyze your current allocation to ensure you are positioned to capture future growth, balancing your need for recovery with your risk tolerance.
- Roth vs. Traditional Strategy: We help you decide if directing your future contributions to the Roth TSP could provide tax-free growth that mathematically outweighs the temporary loss of earnings from the shutdown.
The shutdown cost you time in the market. Don’t let it cost you your retirement security.
Take the definitive step to recover your lost ground. Contact Internal Benefit Advisors today for a comprehensive TSP review.
References
- FEDweek. “Missed TSP Investments to Be Made Up, but No Earnings Credited.”
- Federal Retirement Thrift Investment Board. (2025). Monthly Fund Returns (October 2025).
- Internal Benefit Advisors. Retrieved from https://internalbenefitadvisors.com
