Thread: IRA vs TSP

Well, it's posts like this that make me glad I participate here. What an eye opener, Azanon, this is good information. I like your logic about putting only the first 5 in the TSP.

Whoa, you're mixing apples with oranges.

It's true that you have to take an annuity in order to participate in the FEHB benefit program, but that annuity is from your retirement benefits, not your TSP.

Your TSP is your "own" account, and you can either draw it all out, roll it over into an IRA, or take an annuity when you retire. But your TSP is not tied to your health benefits.

Brewnet is correct. You do NOT need to take an annuity from your TSP account to continue health insurance into retirement. You need to be enrolled in FEHB for the last 5 years of your employ and that is the only requirement.

Sorry. I guess I got thrown off by a couple things; first being the term annuity. I thought you "annutize" a large sum of money, so that you get a series of fixed payments over time. Within the federal system, the only "annuity" i was aware that we have was, potentially,the TSP annuity. Apparently, they also call the basic benefit plan an annuity as well, even though there is no sum of money behind it.

The other thing that confused me is that they actually list that you must take the annuity to be eligible to continue FEHB. Is there any other option with respect to the basic benefit plan? meaning, who wouldnt take the annuity that's based off your high-3? Seems like that's a given, and thus shouldnt be listed as a requirement.

Unfortunately there is no short answer here. It gets quite complicated because the rules are different for CSRS and FERS. There are different types of retirement annuities and different levels within.

Most retirees do take an annuity because they want tocarry their health insurance into retirement, and to be able to pass that benefit on to their survivors in case of their demise. The premise may be that you should have enough of a retirement annuity to have the payment of FEHB automatically taken care of. You can take a reduced annuity, but again, no short answer.

If you want to do some in-depth reading, go to www.opm.gov/retirement

Does anyone know how much you pay after retiring? I know now the federal government pays about 3/4ths of it while working. I pay 88.99/2 weeks, and the federal government portion is like 240/2 weeks. Do you have to pay all of it after you retire?

Just answered my own question:

Will my premiums increase once I retire?


A. No, you will pay the same premium as you paid while you were an employee.

WOW! That's huge. OMG, i'm so done when i reach my retirement age of 58. 30% annutiy + SS suppliment (estimated about 15% of my salary) + not having to save for retirement (10-15%), means I only need 40-45% from my TSP/IRAs, and that's assuming my expenses dont drop.

What about cost of living increases?

there's a cola in the annuity, right? doesnt SS also have a cola component? as for my saved funds, i'll keep a 40-60% stock position to keep up with inflation.

FERS COLAs are payable to retirees age 62 and older.

ok so there ya go. 58-62 wont be enough time for there to be any significant COL increases. its the exponential effect of 20-30 years one would have to worry about if there were no COLA adjustments.