The TSP Life Annuity, provided by MetLife, presents an alternative for TSP account holders seeking a distinct approach to managing their distributions. However, before diving in, it’s crucial to weigh the facts:
Is the TSP Life Annuity Suitable for You?
For retirees seeking a third source of guaranteed, lifetime income alongside their FERS pension and Social Security benefits, the TSP Life Annuity may be an enticing option. Yet, several considerations demand attention:
1. Irreversible Decision: Opting for the TSP Life Annuity is a one-way street with no option for reversal under any circumstances.
2. Surrendering TSP Access: Purchasing the annuity entails relinquishing access to the TSP funds utilized for the transaction.
3. Beneficiary Implications: Upon your demise, MetLife retains any remaining TSP balance unless specific beneficiary options are chosen, potentially affecting inheritances.
4. Limited Growth Potential: The growth of your TSP savings is restricted, with MetLife guaranteeing only a fixed growth rate of around 2.6%.
Exploring TSP Life Annuity Variants
The TSP Life Annuity manifests 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 is the exclusive TSP annuity provider, alternative annuities from private insurers offer distinct features and potentially superior payouts. These options, coupled with customizable riders, warrant careful consideration.
Making an Informed Choice
The MetLife TSP Annuity isn’t your sole recourse. Private insurers furnish a diverse array of annuities, prompting the need for comparison. Consulting with an FRC® trained advisor empowers you to evaluate the TSP annuity against competing lifetime annuity offerings, ensuring an informed decision aligned with your retirement objectives.
