What an $850B Military Budget Means for Your G Fund (and Your Future)

June 05, 2025

The Pentagon just locked in a record-setting $850 billion budget—a number so large it barely registers anymore.

But here’s the part that’s not in the headlines:

This kind of spending has a direct impact on your TSP.

Specifically? The G Fund.

Wait... Isn’t the G Fund Supposed to Be “Safe”?

Yes. And in many ways, it still is.

The G Fund is backed by the U.S. Treasury. It doesn’t lose value, doesn’t swing with the stock market, and doesn’t scare anyone during a downturn.

That’s the upside.

But here’s the hidden risk:

When the government borrows more—like it will to fund this $850B military budget—it often leads to:

  • More Treasury bonds hitting the market

  • Pressure on short-term interest rates

  • And eventually... higher inflation risk

And when inflation rises faster than G Fund yields?

👉 You’re earning a guaranteed return that still leaves you behind.

The Illusion of Safety

Let’s say your G Fund earns 3.75% next year.

But inflation clocks in at 4.5%.

On paper? You made money. In reality? You lost purchasing power.

It’s a silent erosion. No panic. No red numbers.

Just a little less future freedom each year.

This is how federal retirees end up wondering:

“How did I save for 30 years and still feel squeezed?”

What Smart Feds Are Doing Now

Some federal employees think the solution is to avoid risk altogether.

Others panic and jump fully into stocks.

Neither is ideal.

Here’s a more measured approach some experienced TSP participants are using:

  1. Reassess G Fund weight.
    If you're more than 3–5 years from retirement, being overly G-heavy could be dragging long-term growth.

  2. Watch real returns, not just nominal ones.
    The number in your account means less than what it buys you later.

  3. Balance safety with strategy.
    Funds like the C and F Funds may feel riskier—but in a high-spending, inflationary environment, they could offer better protection over time than the illusion of “no risk.”

Final Thought:

The G Fund isn’t broken. It’s just not a one-size-fits-all solution anymore.

When Washington spends big, there are winners and losers.

And “safe” can quietly become expensive if you’re not paying attention.

Your job isn’t to react to every budget vote.

But it is to recognize when a long-standing assumption—like the G Fund always being the best conservative play—needs updating.

Because retirement isn’t about avoiding risk.

It’s about understanding which risks are worth taking... and which ones you’re already taking without even knowing it.

—The Federal Wealth Retirement