The TSP Life Annuity, administered by MetLife, presents an alternative avenue for TSP account holders seeking a unique approach to managing their distributions. However, before committing, it’s essential to consider the following:
Is the TSP Life Annuity Right for You?
For retirees seeking a third source of guaranteed, lifelong income alongside their FERS pension and Social Security benefits, the TSP Life Annuity may appear attractive. However, several factors require careful consideration:
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Irreversible Decision: Opting for the TSP Life Annuity is irreversible, with no opportunity for reversal under any circumstances.
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Surrendering TSP Access: Purchasing the annuity means giving up access to the TSP funds utilized for the transaction.
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Beneficiary Implications: Upon your passing, MetLife retains any remaining TSP balance unless specific beneficiary options are selected, potentially impacting inheritances.
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Limited Growth Potential: The growth of your TSP savings is constrained, with MetLife guaranteeing only a fixed growth rate of approximately 2.6%.
Exploring TSP Life Annuity Options
The TSP Life Annuity is available in three primary forms, essentially variations of immediate annuities:
- Single life annuity, offering level or increasing payments.
- Joint life annuity with your spouse, featuring level or increasing payments.
- Joint life annuity with a non-spouse, providing level payments.
With level payments, the monthly amount remains constant annually. Opting for joint life annuities ensures steady payments as long as you and your annuitant survive, with the choice between 100% or 50% survivor annuity options.
MetLife TSP Annuity vs. Other Providers
While MetLife serves as the exclusive TSP annuity provider, alternative annuities from private insurers offer distinct features and potentially higher payouts. These options, coupled with customizable riders, necessitate careful consideration.
Making a Well-Informed Decision
The MetLife TSP Annuity isn’t your only option. Private insurers offer a diverse array of annuities, prompting the need for comparison. Consulting with an FRC® trained advisor empowers you to assess the TSP annuity against competing lifetime annuity offerings, ensuring a decision aligned with your retirement goals.
