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Updated October 20, 2026, with returns through September and the latest inflation report.
The Thrift Savings Plan (TSP) Government Securities Investment Fund, known as the G Fund, protects savings from market losses in a way no other TSP fund can. Its balance does not fall when stocks drop or bond prices slide. But inflation is a different risk, and the G Fund does not always keep up with it. When prices rise faster than the fund’s return, an account can hold more dollars while buying less than it did before.
That question is back in front of TSP participants. The Consumer Price Index for All Urban Consumers (CPI-U) rose 3.7 percent over the 12 months ending in September, up from 3.4 percent in August, according to the Bureau of Labor Statistics (BLS). Gasoline rose 9.1 percent in September alone. At the same time, the G Fund returned 4.51 percent over the past 12 months. This guide compares official G Fund returns with federal inflation data, year by year, and looks at what the numbers do and do not show.
What makes the G Fund different
The G Fund invests in short-term U.S. Treasury securities issued specifically to the TSP. The federal government guarantees principal and interest. Its interest rate is based on the weighted average yield of outstanding Treasury securities with four or more years to maturity, even though the fund holds short-term securities that are issued daily. Because longer-term rates usually run higher than short-term rates, G Fund investors typically earn more than they would from a Treasury bill of similar safety, without the risk that rising interest rates will reduce the market value of the holdings.
That protection is real and valuable. But “no market risk” does not mean “no risk of any kind.” The TSP’s own fund page cautions that the G Fund may not grow enough to offset the loss of purchasing power when inflation runs high.
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G Fund returns against inflation, 2016 through 2025
The table below compares each calendar year’s G Fund return, as published by the TSP, with the December-to-December change in the CPI-U reported by the BLS. The inflation-adjusted return is calculated as (1 + G Fund return) divided by (1 + inflation), minus 1. That is more precise than simply subtracting inflation from the fund’s return.
| Year | G Fund return | CPI-U inflation | Inflation-adjusted return |
|---|---|---|---|
| 2016 | 1.82% | 2.1% | -0.27% |
| 2017 | 2.33% | 2.1% | +0.23% |
| 2018 | 2.91% | 1.9% | +0.99% |
| 2019 | 2.24% | 2.3% | -0.06% |
| 2020 | 0.97% | 1.4% | -0.42% |
| 2021 | 1.38% | 7.0% | -5.25% |
| 2022 | 2.98% | 6.5% | -3.31% |
| 2023 | 4.22% | 3.4% | +0.79% |
| 2024 | 4.40% | 2.9% | +1.46% |
| 2025 | 4.44% | 2.7% | +1.69% |
Five of the ten years produced a negative inflation-adjusted return, though three of those were small shortfalls of less than half a percentage point. The two painful years were 2021 and 2022, when inflation reached its highest levels in decades and the G Fund’s rate had not yet caught up.
The five-year and ten-year totals
| Period | G Fund cumulative gain | Consumer prices cumulative increase | Cumulative inflation-adjusted return | Annualized inflation-adjusted return |
|---|---|---|---|---|
| 2021 through 2025 | 18.6% | 24.5% | -4.7% | -0.96% |
| 2016 through 2025 | 31.3% | 37.2% | -4.3% | -0.44% |
Over the full ten years, a $100,000 G Fund balance grew to about $131,300. Keeping the same purchasing power would have required about $137,200. The balance grew in dollar terms every year, but the cumulative gain fell short of the rise in prices.
Both periods are heavily influenced by 2021 and 2022. Strip those two years out and the G Fund roughly matched or modestly beat inflation in most of the remaining years, and 2023 through 2025 were all positive as the fund’s rate rose with Treasury yields.
What the 2026 numbers show
Through September 2026, the G Fund had gained 3.41 percent for the year and 4.51 percent over the trailing 12 months, according to the monthly TSP returns report. Measured against the 3.7 percent inflation rate for the 12 months ending in September, that works out to an inflation-adjusted return of about +0.8 percent. The G Fund is staying ahead of inflation, but only narrowly. Core inflation, which excludes food and energy, was 2.6 percent, and gasoline accounted for more than half of September’s monthly increase, so the jump was driven largely by energy prices.
The Federal Reserve raised its target rate on September 16 for the first time in more than three years. Because the G Fund’s rate follows Treasury yields, higher rates can lift the fund’s return over time. The adjustment tends to lag, however, which is exactly what happened in 2021 and 2022. For a closer look at that reaction, see The Fed’s Rate Hike and TSP Fund Returns.
Safe from losses is not the same as the best real return
Inflation-adjusted results look different across funds. The table below converts each core fund’s trailing 12-month return through September 2026 into an inflation-adjusted figure using the 3.7 percent CPI-U rate.
| Fund | 12-month return (through September 2026) | Inflation-adjusted return |
|---|---|---|
| G Fund | +4.51% | +0.78% |
| F Fund | -1.77% | -5.27% |
| C Fund | +15.72% | +11.59% |
| S Fund | +11.82% | +7.83% |
| I Fund | +23.06% | +18.67% |
The stock funds (the Common Stock Index Investment Fund, or C Fund; the Small Cap Stock Index Investment Fund, or S Fund; and the International Stock Index Investment Fund, or I Fund) have posted strong real gains over the past year. But the same table shows why the G Fund exists. The Fixed Income Index Investment Fund, or F Fund, lost 2.59 percent in September alone and is the only core fund down for 2026, a reminder that bonds are not a risk-free substitute when interest rates rise.
The 2022 comparison is more striking. That year, the G Fund’s inflation-adjusted return was about -3.3 percent. But the F Fund’s was about -18.2 percent, the C Fund’s about -23.1 percent, the S Fund’s about -30.8 percent and the I Fund’s about -19.2 percent. In a year when both stocks and bonds fell sharply, the G Fund lost the least purchasing power of any core fund.
The case for keeping money in the G Fund
The strongest argument for the G Fund is certainty. Money in the fund will not be reduced by a stock or bond market decline, which matters most when the money will be needed soon. A federal employee a few years from retirement may not have time to recover from a major drop before withdrawals begin. A retiree already taking distributions may want a stable portion of the account to draw from, so stocks do not have to be sold at low prices to cover current expenses.
The TSP’s Lifecycle (L) Funds follow the same logic. Each combines the G, F, C, S and I Funds, and each becomes more conservative as its target date approaches, with the G and F Funds serving as the fixed-income anchor. A large G Fund allocation can be a sound, deliberate choice when it matches the participant’s withdrawal needs, time horizon and tolerance for losses.
The case against holding too much
The argument against a large, permanent G Fund allocation is long-term purchasing power. The ten-year table shows how a period of high inflation can leave the fund behind prices, and a retirement that lasts 20 or 30 years may need growth to offset rising costs. Healthcare, housing and insurance costs can also rise faster than the CPI-U, which is a broad national average.
A participant with many years until retirement also gives up growth by staying heavily in the G Fund. Stocks have historically delivered higher long-term returns than the G Fund, but with sharp swings along the way. Neither choice is free. The G Fund trades growth for certainty, and stocks trade certainty for growth.
Timing matters more than the fund itself
The same allocation can be right for one participant and wrong for another. Several factors shift the balance:
- Time horizon: Money needed within a few years usually favors stability. Money needed in 15 or 20 years has more time to ride out declines.
- Other income: A Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS) annuity, Social Security and other savings can reduce how much risk the TSP needs to carry.
- Withdrawal timing: A market decline in the first years of retirement can do lasting damage, because withdrawals shrink the base that has to recover.
- Behavior: A participant who would sell stocks in a panic may be better served by a smaller stock allocation held through the decline.
Participants weighing these trade-offs near retirement can start with Insight on How Investors Should Respond to TSP Volatility and The Barbell: A Strategy for Managing the Thrift Savings Plan in Retirement.
What the comparison does not show
The year-by-year figures are a useful check, but they have limits. The CPI-U measures a broad national basket of goods and services. An individual retiree’s costs can rise faster or slower depending on health care, housing, travel and food. The comparison also ignores taxes: traditional TSP withdrawals are taxable income, while qualified Roth withdrawals are not. And a period that began with the highest inflation in decades is not a forecast. Inflation could be higher or lower over the next ten years.
Most important, inflation protection is not the G Fund’s only job. Its purpose is stable returns without market losses. A participant who accepts a lower expected return in exchange for certainty may be making an intentional trade-off, not an investment mistake.
Staying in the G Fund is also a decision
Leaving money in the G Fund can feel like avoiding a decision, but it is an allocation choice like any other. It protects against market losses and limits participation in stock gains. It preserves principal over short periods and can lose purchasing power when inflation outpaces the fund’s return. Moving money out carries its own consequences, since stock funds can fall as well as rise after a transfer.
The more durable question is whether each participant’s allocation was built around a retirement timeline and spending plan, or whether it simply reflects whatever felt comfortable at the time.
Helpful resources
- TSP.gov: G Fund fact sheet: the fund’s objective, holdings and risk disclosures, straight from the TSP.
- TSP.gov: Rates of return: monthly and annual return history for every TSP fund.
- TSP.gov: Lifecycle Funds: how the L Funds blend the core funds based on a target retirement date.
- BLS: Consumer Price Index: the official inflation data used in this comparison.