TSP Annuity Question

[Dooper]

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Does anyone have an opinion on buying a TSP immediate annuity (MetLife) compared to going out in the marketplace for an immediate annuity. Would it make sense to roll over the TSP into an IRA and then buy several annuities over time? How much of a premium should an inflation protected joiny annuity pay over say a 10 year Treasury.

What if MetLife had financial problems? Isn't an annuity just an unsecured loan to a very complex financial institution? Would U.S. make good on the TSP annuities if there was a problem.

 

[Wheels]

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I'm not an expert, far from it in fact, but I think most experts would tell you not to buy an annuity period. From TSP (MetLife) or anyone else.

Dave

 

[Birchtree]

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Wheels,

You got that right-I've never met a life insurance company I liked. Why bet on your life and pay all those fees for the pleasure of doing so.

I would recomend keeping the funds in the TSP. Become more cognizant of the investing climate and make even more money while in retirement-especially when you will have more time. Moving some funds to an IRA would be advisable-you have more flexibility. When you control your tax bracket you can begin to shift from a traditional IRA to a Roth IRA providing you are under the income limitations.

If you are concerned about leaving money to heirs- the IRAs' may be the simplest way to approach the situation. Pyriel has offered some advice in one of the forums that you may find enlightening. Beware of IRS traps that are in place-you are entering a complex arena.

Dennis

 

[azanon]

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I second these opinions; annuities only make sense if you have no self-control and need have someone else take your money to pay you a fixed amount over time for the rest of your life.

If you're trying to maximize the amount of money you'll have to live on, you'll immediately reject any annuity options, including the one provided to us. Besides, both FERS and CSCR (sp?) employees will be getting a pension which is already going to be providing you with a fixed income. On top of that, FERS and some CSCR employees will also get Social Security, another guaranteed income source. Best to invest your TSP monies yourself. If you dont know what you're doing, seek a financial counselor and even pay for help as to how to invest your money before you go with an annuity option.

Azanon

 

[grandma]

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Azaonon said:Besides, both FERS and CSCR (sp?) employees will be getting a pension which is already going to be providing you with a fixed income.

Azanon, do you know how the FERS is figured for payout? I know the paystub has the amt listed, but I recall being told years ago that you had to have 20 years in to make it worth anything when you retire.

grandma

 

[Dogdaddy]

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Grandma:

Basic Rule of Thumb is: You take the average of the three highest income years and multiply that by 1% for each year of FERS service.....example: if the high three average$50,000 and you've got 10 years of service when you retire, then the annuity is $5000/yr ($417/Month). I think you might get 1.1% per year of service if you wait until age 62 to retire. There is also an adjustment added if you retire before you're eligible to draw social security and you get that until you start getting soc.sec.

Not sure that helps much...there's a 200 page book at the OPM Website that explains it all in detail.

Regards/Nick

 

[grandma]

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Dogdaddy wrote:

Not sure that helps much

OKay, thanks, Dogdaddy - that does enlighten me....

...there's a 200 page book at the OPM Website that explains it all in detail.

However - enlightenment does not not sound like an apt description for 200 pages of additonal reading reading! I guess I could check it out to find out if they go by theyearly salary, or if they figure in the OT, off-tour duty pay, the total on the paycheck.Imay have to just let HR take care of that when the time comes!!!

I need to get started on Spaff's suggested econ 101. I am really excited about that!

well, maybe not THAT much, that may be stretching it a bit!!