Is the G-Fund Losing You Money?

Is the G-Fund Losing You Money_.mp3: Audio automatically transcribed by Sonix

Is the G-Fund Losing You Money_.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content. That's what it's here for. It's for you, the federal employee, that is looking for accurate information when it comes to your benefits and retirement situations. And today's content. Today's episode, we're going to be hitting on a question that I got asked recently from a federal employee when it came about TSP. And I'm sure you've had this conversation with others or you've had this thought, but it revolves around, am I losing money in the G fund? Is the G fund really doing me a service? Is the G fund benefiting me in any way, shape or form? And we'll unpack that here in a little bit. I'll give you my Opinions. We'll get to the root of the question and why it was asked. But the whole idea is, is the G fund losing you money ultimately? Now, I know in actual practice when we talk about the G fund, you should already know the answer. I don't want to jump ahead too fast, but this came again as a question asked of me or to me by a federal employee who was just talking about TSP and their allocations and where they're putting money. And we were discussing risk tolerance, and we're talking about just how all the funds work and what they do, and their performance history and all these things.

Speaker 1:
And the question popped up. So let's dive into today's content and talk about the G fund and whether or not it's losing you money. So what is the G fund? First of all, the G fund is the fund that is made up of government securities. And let me back up just a second here and refresh or re-ask the question. Right. The question was, um, the G fund protects me, but is it indirectly losing me money? And this was the question that they asked. So sorry for jumping ahead and talking about, you know, what the G fund is. First, let me restate this question. The G fund protects me from loss. But is it indirectly losing me money? And I'll get into the nature of that question. Right. But I said before, is the G fund losing you money? But here's here's how it was actually posed. Is it indirectly losing you money? And first of all, let's go back and say, what is the G fund? Well, it's a government securities investment fund. It's the only fund that is guaranteed never to have a losing year. It doesn't have a losing month, a losing year. You're never going to see a negative on the board when it comes to the G fund. It doesn't say that it can't go down to zero, but it's the only fund that is never going to have a losing year. So the question is, normally, even if tsp.gov states that ensuring preservation of capital and generating returns above those of short term treasury securities.

Speaker 1:
Short term US Treasury securities. How can the G fund lose you money? The person was asking me this and it was like, you know, I'm trying to get to the root of it. And that's why they said, is it indirectly losing me money? Because I just stated it can't lose you money. As far as performance, it's guaranteed never to lose. It's guaranteed never to have a negative. So how can this thing lose you money? What were they talking about? Now they're talking about ultimately, um, inflation and comparing the rate of return with the G fund to inflation. Is it keeping up with inflation. Is the G fund earning enough to keep up with historically the level of inflation. And we'll talk about returns here in just a second. But that was the nature of this. Is it indirectly losing me money? Is it worth keeping it in the G fund now? Unfortunately, within TSP, the only way to guarantee against loss if you're ultra conservative or if you don't want to take too much risk, or if you don't want to lose any money. The only way to do that is to put your money in the G fund within TSP, because it's the only fund that is guaranteed never to lose. So you don't want to take risk or too much risk. You're probably going to have a portion in the G fund. And if you have an L fund, if you're in any of the L funds, then you do have a portion in the G fund.

Speaker 1:
But is the G fund indirectly losing you money because the interest that it earns is not keeping up with the inflation rate? Well, that can be a concern. For example, let's say, you know, the the the rate of return on an investment was 3%, but the inflation rate was 7%. That means, you know, the value or cost of things, cost of goods and services and other things. Cost of living is going up by 7%, but your account is only growing by 3%. Some people would think that since it's not keeping up with inflation, you're indirectly losing money or the value is not keeping up with the rising cost of things, you know, goods and services and cost of living. So that could be indirectly losing you money. And that's where, again, this question came from. So first of all, what are the returns within TSB? What are the historical rates of return within the G fund. Sorry. Within TSB you can look this up on tsb.gov. This is exactly where I just pulled these numbers from as of today. Uh, June 22nd, 2026. These are the rates of return. And you can look at what it's doing year to date. And you can look at what it's done in the past. But I just want to go over some, some key markers, right? Just looking at an average. So the five year average, five year average, this is the last five years is 0.7 4%, 3.7 for the last ten years.

Speaker 1:
2.87% average rate of return in the G fund since inception 1988. Since inception, the G fund has returned 4.64% average annual return. Again, this is not including any down years because there's never been a down year within the G fund, but 3.74 in the last five years. 287 in the last ten years. And historically the annual average is 4.64%. Now, how is that doing compared to the recent rates and historical rates of inflation? Well, in the last five years we just went back. I'll scoot back real quick. 3.74 for TSB 4.13 average inflation rate over the past five years. What over ten. We said 2.87 with the G fund 3.20. When it comes to the average annual rate of inflation. Now it's different depending on where you live, so where you live may be different. The rate of inflation may be more or less. This is the national average over the past ten years 3.20%. You can look these numbers up. You can Google it, you can AI it, you can do whatever. But I'm just trying to make a point to say within the past decade, the last five years, even the average rate of inflation is beating the average rate of return on the G fund. So in those cases, yes, it could be losing you money as far as the overall purchasing power and value of that money. Since 1988, though, inflation on the average has not been as high 2.76. And we showed that the average rate of return to the G fund 4.64.

Speaker 1:
So in in since inception 1988. Overall the rate. And it's almost 40 years. The average rate of inflation has been less than the rate of return on the G fund. But in recent history, if you're thinking of investing in the G fund, yes, it's great because it's conservative, but it's not keeping up with inflation in the short term. The last five years or the last ten years. So just something to consider. And why am I talking about that? And what is the or is because everybody's got to make a decision for their own reasons. Everybody's situation is different. Your situation is different than your colleague that works with you, is different than the person working in a totally different agency. With the federal government in a different state, everybody's situation is unique and different. So you have to do what's best for you in your situation, your family, your future, your desired retirement. So what is the verdict? And I know we're getting wrapped up here fairly quickly, um, on today's episode, but again, I wanted to address this question. Is the G fund indirectly losing me money? Well, for those that are looking for protection from market risk within TSP. Unfortunately, your only option to guarantee against loss is the G fund that is the only risk free option within TSP. There are no others there, though. There's limited risk, right? There's there's fund options that have a less risk than others, but the only one that's guaranteed not to lose.

Speaker 1:
You can look this up again on tsp.gov. This is not a matter of opinion. This is fact that the only one that's guaranteed not to lose is the G fund. Now, in recent years, the G fund does not tend to keep up with inflation. We just looked at the last five years or the last ten years, and you can do your own digging and check those numbers out yourself. But we're just talking about, you know, is it keeping up with your overall purchasing power? Now, if you're if you're on 100% a set on saying, hey, I, I don't want to lose any money, then unfortunately, if you're sticking with NTSB, you don't want to take that risk. You got to go with the G fund, so you may again indirectly lose money because it's not keeping up with overall inflation and the cost of goods and services and things. Now what does that mean? That means overall, if this continues, this trend happens where inflation is higher than the rate of return of the G fund. Well, then by the time you retire, the value of that money, the purchasing power of that money, the what that money is going to buy for you and do for you in retirement isn't going to be keeping up with what it's going to cost to live. And that's what most people are putting money in the TSP for. It's going to supplement their retirement in some way, shape or form.

Speaker 1:
So understand, you want to keep up with the cost of goods and services and cost of living. What if there was a better way? What if there was a way to keep up with inflation but get g fund like protection? Is that possible? And I'm here to tell you, yes, that is possible. There are options out there that are available to those that are looking to keep their money safe and sound from market risk, just like the G fund, with the opportunity to earn better interest than the G fund. Now again, this is not a one size fits all. This concept, this idea is not for everybody. But I will say this for those that are employees that are looking for guaranteed protection, just like the G fund, meaning you cannot have a losing year, you cannot have a losing month, you're not going to see a negative as far as a return. The only reason your account balance would go down is if you withdrew money. If you had that type of account, same as the G fund with better than G fund like returns. Is that something you'd be interested in looking at or considering, or at least visualizing so you can see what that option looks like? Chances are, and I'm not you. I'm not answering the question for you, but just chances are the answer is probably yes. If you're guaranteed that you don't want to lose any money or you're guaranteed not to lose any money. Now there's the other side of the coin.

Speaker 1:
For those that are willing to take risk and those that are willing to, um, keep the money invested directly in the market through all the other funds, whether it's the stock funds, the, the CDs and the I or the bond fund, the F fund or any of the L funds, those all have risk to them, different components of risk. If you're willing to take risk in order to beat inflation, then those those things can do very well as well. You can see the returns on tsb.com, but a lot of folks that I talked to want that protection, safety and security and guarantee that they cannot lose money but want better than G fund like returns. And those options are available. Unfortunately, they don't talk about them at TSB because they're not allowed to. They're only supposed to tell you what is involved within TSB. But if you want to know what's out there, what your options are, that's exactly what we do. That's exactly how we help federal employees. You need to know all the variables. You need to know all the the pieces of the puzzle here to put it together, to decide what's right for you and your family, your situation. So reach out to us. You can go to our website, Federal retirement show.com. You can fill out the form and one of our experts across the country, if it's not me personally, we'll be reaching out to you in order to review your entire situation and specifically talk about TSP and all the different options and things that are available based upon your risk tolerance and what you want your TSP to do for you.

Speaker 1:
But my overall verdict is, yeah, if the trend stays as it has been for the past decade, the G fund within TSP can indirectly be losing you money because it's not keeping up with inflation overall. So if you're concerned about that as well, again, reach out to us. Go to the website federal retirement show.com. Well, as you can see by the ticker that we've got over 180 episodes on the federal retirement show, all geared towards you, the federal employee. And there's so much information here for you to review, so much information for you to peruse, so much information for you to share with your colleagues. That's what we want to have happen. We want this to organically spread throughout all the different agencies that federal government employees work for. So you can gain all this knowledge. You can, uh, build that confidence in your future in your retirement. So go back, view all the content if you like it, share it with somebody else. If you like all the episodes you like what we do, share it with a colleague who doesn't know about the federal retirement show. We want to reach as many federal employees as possible. So thank you again for taking the time out of your schedule to join us to view our content. My name is Val Majewski, and I really look forward to seeing you on a future episode.

Speaker 2:
I'm Matt McClure with the Retirement Radio Network powered by Emerald Life. Well, there are new Medicaid work requirements set to go into effect next year, and some experts are warning that that could disrupt cancer treatment and cost patients coverage. Here to talk more about that is Doctor Julie Gralow, chief medical officer and executive vice president of the Association for Clinical Oncology. Doctor Gralow, thanks so much for for joining me. A really nice to talk to you again.

Speaker 3:
Thanks for having me. Matt.

Speaker 2:
Talk, first of all, if you will, about these Medicaid work requirements. Um, as far as I understand it, starting in January of 2027, as I mentioned that adults ages 19 to 64 are going to be required to work or participate in qualifying community engagement activities at least 80 hours a month to maintain Medicaid coverage. Talk about that and its potential impact.

Speaker 4:
With the 80 hours a week. There are exemptions that you can do, and there have been exemptions in place for a while. Work exemptions there now moving them to not just once a year that you have to prove that you really can't work but twice a year, so twice as many opportunities for administrative snafus. Paperwork, not getting in, but also in addition to just proving that you have a diagnosis that would qualify you like cancer, you have to. The states are obligated to prove back to the federal government again that they're. They're recording why the person can't work. What is the actual issue? Prove that just because they have a cancer diagnosis and they're on chemo, what is it that's preventing them from being able to do this 80 hours of week of work? Um, sorry, 80 hours a month of work. And so, um, you can't just self-report anymore that you have cancer. You're obligated to demonstrate what it is preventing you from work. And now also knew your health care team has to submit and document and prove that's another burden on the care providers that's taking away time from caring for patients with cancer.

Speaker 2:
Well, yeah, it sounds like there are just a lot of hoops to jump through. And I mean, that is if I'm understanding. I mean, that is kind of the, the crux of why it could really negatively impact cancer patients, especially those who are in, as you say, like, you know, active treatment, undergoing chemo, undergoing, you know, maybe radiation or whatever other immunotherapy, whatever other treatments they, they have to undergo. Um, just making them and their care teams jump through all these hoops could really have a big negative impact.

Speaker 4:
We're viewing this as being potentially life threatening, um, for people with cancer. Any gap in their coverage, um, could result in treatment delays or if they don't delay the treatment out of pocket expenses because they weren't covered during a chemo cycle, that could result in worse survival outcomes, you know, and not because they aren't eligible for this waiver, this exemption for the work requirements, but because the paperwork hasn't been processed correctly.

Speaker 2:
Yeah. And right, as you were saying, is there even just administrative errors? And all of this can lead to folks losing their coverage, even just temporarily, let's say someone even, even if it just is for a short period of time, however long that might be, what kind of impact could that have when a Medicaid covered individual loses that coverage, even just for a temporary time period?

Speaker 4:
Well, if they know they've lost the coverage, they're going to delay their treatment. They're not going to maybe pick up their next prescription. And that right there, those gaps can really impact the curability of the cancer. Um, we know that Medicaid covers about 1 in 5 adults under the age of 65 who are newly diagnosed with cancer. And also Medicaid covers about 2 million individuals who have a history of a diagnosis of cancer. This is a lot of Americans.

Speaker 2:
Yeah, it's not something that's just a very isolated thing. I think people, maybe in the general population who are not impacted or covered by Medicaid might think that, oh, well, this is just, you know, how many people could it possibly affect? And as you say there, you know, millions. Um, are there ways to, to rectify this and make this situation not as burdensome and potentially as you say, life threatening for these patients?

Speaker 4:
Well, our recommendation is to encourage states and each state is going to implement this differently. Um, but to encourage states to accept what's already in the electronic medical record, the the billing that's already going to Medicaid that proves the diagnosis and what treatment patients are on. Don't make us reinvent the wheel, fill out paperwork, fax things, whatever. Um, you know, the requirements could be just accept that in the medical record, we already have documentation of a diagnosis of cancer. We already know and we're billing for the treatment, except that as proof both on behalf of the patient and on behalf of the care providers that, you know, this is already known. And don't force additional paperwork, additional time and expenses, things that could get lost in the mail or just because a patient is so tired they forgot to submit something on time.

Speaker 2:
Now, just about time for us to wrap things up here, Doctor Grillo. But, um, if folks who are listening want to learn more about this issue and about how they can potentially make a difference here. Where could they go to to find out more information?

Speaker 4:
Our website has some additional information. It's asco.org/medicaid. That's A SCO dot ORG slash Medicaid. And again I'll reemphasize this is a state by state issue. How each state is going to implement it. It's now at the state level. The guidance comes from the federal government. But the states will decide how they're going to implement it. So also, you know, look at what your own state is doing. We have some of that information on our website and contact your lawmakers.

Speaker 2:
Very good. Well, Doctor Julie Gralow is chief medical officer and executive vice president of the Association for Clinical Oncology, or Asco. Doctor Gralow, thank you so much for taking some time for me and talking about this really important topic. Really appreciate it.

Speaker 4:
And thanks for spreading the word.

Speaker 2:
With the Retirement Radio Network powered by Amora life, I'm Matt McClure.

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