TSP Annuity Calculator: Take The Payment, Lump Sum, or Rollover?

Shawn Plummer

CEO, The Annuity Expert

How Much Will My TSP Pay Me In Retirement?

Are you wondering how to make the most of your TSP account in retirement? The TSP Annuity Calculator is a powerful tool that can help you estimate your lifetime annuity payments if you decide to purchase an annuity through one of our outside vendors. This calculator allows you to explore different options, compare against Metlife’s annuity options, and determine your savings goals to ensure a secure retirement income.

Key Takeaways:

  • Use our TSP Annuity Calculator to estimate your lifetime withdrawals using an annuity with a Guaranteed Lifetime Withdrawal Benefit.
  • Explore other payment options (via a rollover) instead of the TSP’s Metlife annuity option, which requires you to give up control over your hard-earned retirement savings.
  • Our single and joint-life payouts provide you a retirement income for the rest of your life or both spouses’ lives without giving up control over your money and leaving a lump sum death benefit to beneficiaries.

The Best TSP Annuity Calculator For Retirement

To maximize your TSP after retirement, compare Metlife’s TSP annuity payments from your current Thrift Savings Plan to rolling it over to a new annuity (without tax penalties) offering guaranteed lifetime withdrawals (GLWB). If you’re nearing retirement, use this TSP payment calculator to forecast future withdrawals. The payouts are accurate projections that are contractually guaranteed. All TSP annuity rates are fixed.

Tsp Income Calculator

Understanding TSP Annuity Options

TSP Annuity Single Life and Joint Life Options

  • Single Life Annuity: Provides a monthly payment for the life of the retiree only based on life expectancy.
  • Joint Life Annuity: Continues payments to a survivor after the retiree’s death.

TSP Annuity Payment Types

  • Level Payments: Fixed monthly payments throughout the annuity period.
  • Increasing Payments: The TSP distribution increases annually, typically to keep up with inflation.

Optional Cash Refund and Ten-Year Certain Add-ons

  • Optional Cash Refund: Ensures any remaining balance is paid to a beneficiary if the retiree dies before recovering the total investment. This option lowers the payment amount further.
  • Ten-Year Certain: Guarantees payments for at least 10 years. If the retiree dies before 10 years, the beneficiary receives the remaining payments. There is no death benefit after the initial 10 years. This option lowers the payment amount further.

Limitations of TSP Annuity Options

  • Irrevocability: Once chosen, TSP annuity payments cannot be altered.
  • No Interest Earning: TSP annuities do not earn interest after the purchase.
  • Potentially Lower Rates: TSP annuity rates may be lower than other investment options.

Death Benefits and TSP Annuity

  • If a TSP annuity is not purchased: The TSP balance can be left to a designated beneficiary.
  • If a TSP annuity is purchased: Death benefits are limited and depend on the chosen annuity option.

Related Reading: Why Do People Choose a Lump Sum Over an Annuity?

TSP Annuity Vs. IRA Annuity With GLWB

Benefits of Rolling Over TSP into an IRA Annuity With GLWB

  1. Control Over Retirement Savings: Rolling over your Thrift Savings Plan (TSP) into an Individual Retirement Account (IRA) annuity gives you more control over your retirement funds. Unlike the TSP life annuity, an IRA annuity often provides a wider range of investment options and flexibility in managing those investments.
    • Note: There are no tax penalties to roll a Thrift Savings Plan into an IRA annuity.
  2. Earning Interest: Depending on the type of annuity and the investments chosen, An IRA annuity can potentially earn more interest than a TSP account. This can lead to increased retirement savings over time.
  3. Joint Life Payout Options: IRA annuities typically offer joint life payout options, allowing retirees to provide for their spouses. This means that if you pass away, your spouse can continue receiving benefits, which may not be as flexible in a TSP annuity.
  4. Inflation Adjustment Option: Some IRA annuities offer inflation adjustment options. This feature helps to protect your retirement income from the eroding effects of inflation, which is a crucial aspect often lacking in traditional TSP annuities.
  5. Lump Sum Death Benefit: In case of the annuitant’s death, IRA annuities often provide a lump sum death benefit to the beneficiaries. This is not always the case with TSP life annuities, where benefits may cease upon death.

Comparing TSP and IRA Annuity Benefits

FeatureTSP AnnuityIRA Annuity
Investment ControlLimitedHigh
Interest Earning PotentialModerateHigh (Varies by Annuity)
Joint Life PayoutLimited OptionsFlexible Options
Inflation AdjustmentLimitedAvailable (Varies)
Death BenefitUsually NoneLump Sum Available
Tsp Payout Calculator

TSP Withdrawal Comparison

Historically, financial advisors recommend withdrawing 4% from your TSP and adjusting for inflation. However, the 4% rule has been debunked as a safe withdrawal rate. New research concludes that the new rule is as low as 2.8%. The following table compares rolling your TSP into a new annuity with withdrawing income or utilizing an advisor.

FeaturesGLWB AnnuityTSP
Withdrawal Percentage5.20% – 6.55%4%
Can Income Increase?YesYes
Can Income Decrease?NoYes
How Long Will Money Last?Lifetime30 Years+
Annual Fees0 – 1.50%1% – 4%
TaxationTaxable/Tax-FreeTaxable/Tax-Free
Death BenefitAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

Conclusion

When considering the TSP annuity options, it’s crucial to weigh the limitations against the benefits. While TSP annuities provide a guaranteed income, they lack flexibility, interest earning potential, and may offer limited death benefits. A rollover into a fixed indexed annuity can provide a balance between the security of a TSP life annuity and the flexibility of a lump sum, with additional benefits such as interest earning and a lump sum death benefit. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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