Should You Get a TSP Annuity?
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- Опубликовано: 5 фев 2025
- The TSP annuity is a topic that most all FERS retirees or soon to be retirees have considered at some point. With the rise in interest rates, does it make more sense to buy an annuity with Thrift Savings Plan dollars today?
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I bought one of these in December just a fixed, flat with no survivor benefit, basically as an experiment using about 25K of Roth I had in the TSP. I just turned 62, and the monthly payment will be $164.36. That works out to 8.09% per year returned with a break even of 12.35 years. That's not too bad actually. I like having the guaranteed income, and if I don't spend it, then I can always reinvest it.
susze orman in one PBS money show said "next question" right away when someone from audience asked a annuity question. new kids call that throwing shade i believe.
Im about to retire in about 9 months or so should I roll my TSP to a annuity?
Great question that I’d recommend doing some research on before jumping into one.
I purchased over 100K of new issue long term Treasury bonds in Nov-Dec for fixed income. They will pay 4 1/2% to 5% for up to 30 years (the interest is state and local tax exempt). That's about twice the average return of the G fund, with a similar risk profile. The nice thing about Treasuries is they can be sold if you need to get at the principal later on. Those rates are trending down but they may spike again sometime in 2024.
With the current interest rates it makes sense to get the TSP annuity. If they change then would likely not.
There is a lot more involved than just the annuity rate
No it’s not good.
Another example. Single, no dependents, age 72 using a part of TSP to buy an annuity. Pays for itself in 10 years and is lifetime with a 2% inflation adjustment.
I could see getting an annuity if you have no family, and you have some situation such as a disability, a limited health capability such as a dementia or alzheimer's diagnosis. If someone is managing your money for you, an annuity would be impossible to steal.
With a mix of stocks reits, cef, etf. That can avarage 9% return on dividens with out loosing the Nav. You could basicaly make twice that if draw down your nav over time. Or prserve it to pass on to survivors. Annuity no way! I'm making $800 a month now in dividens 150,000 invested.
Remember the 4 percent rule. You will never run out of money
But in this case, she will receive almost 7% !! of her $200,000 annuity every year, guaranteed. Not a bad deal! Current high interest rates provide this opportunity. (The 4% rule can start to fail with a decade of poor market performance)
@@KS-ye3yfTill it runs out. 1100 seems better cause it is for life
@@jonathangatto I don’t understand your last comment
@@KS-ye3yfFrom the video. He says she can get 1100 a month from her TSP
@@jonathangatto yes, that’s 6.6% of her initial investment every year guaranteed. What are you saying about that compared to the 4% rule?