Re: Immediate Annuity
Originally Posted by
EarlyOut
I will be leaving my government job with 17 years, at age 48. Can I get an immediate TSP annuity?
Its less valuable than before. Pasting from my earlier post:
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I have long maintained a retirement spreadsheet and have tweaked it over the years so that it could accurately predict what I could expect to have when I retired. One of the calculations it does concerns the TSP annuity. Using published tables from the TSP website and some basic curve fitting, it calculates the value of a TSP annuity assuming a balance and the prevailing interest rate index. All I have had to do is update that single number each month as the interest rate index changed.
Beginning on April 1 of this year, TSP did a new contract with Met Life and changed all of the tables. The primary change was to take account of the fact that people are living longer, and annuities were therefore too generous. You can guess the result.
When I put the new numbers into my spreadsheet and calculated estimates of an annuity from age 60 to age 70, using estimated balances for my account, I find that the dollar amounts I would receive each month are about 25% smaller than they were using the old tables.
If anyone is considering a TSP annuity, rather than taking a lump sum and investing it your self, be aware that as of April, 2006, the value of a TSP annuity has been reduced by 1/4.
Trading, in its simplest form, is the process of capturing the disconnect between perception and reality.
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