Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

TSP Payday


Figures recently issued by the Federal Retirement Thrift Investment Board, which oversees the Thrift Savings Plan, show that 75 participants in the TSP currently have accounts valued at $1 million or more. And one savvy investor has at least $3 million socked away.

All told, more than 10,000 TSP participants have at least $500,000 in their accounts. I decided to run some numbers through the TSP calculator to find out what kind of income $500,000 would provide a retiree. It turns out that with that kind of money, you could:

  • Withdraw $3,000 per month for 30 years if the remaining balance in the account continued to earn 6 percent interest.
  • Withdraw $2,500 a month for 27 and a half years if the remaining balance earned 4 percent interest.
  • Provide a payout based on life expectancy at the following schedule (based on taking advantage of this option at 57, and assuming the account balance continued to earn a 6 percent rate of return):
Age Montly Payment Age Montly Payment Age Montly Payment Age Montly Payment
57 $1,493.43 69 $2,842.41
81 $3,378.30 93 $5,231.20
58 $1,581.25 70* $1,853.24
82 $3,550.37 94 $5,265.12
59 $1,674.08 71 $1,962.12
83 $3,729.32 95 $5,282.36
60 $1,772.17 72 $2,077.19
84 $3,915.12 96 $5,280.62
61 $1,868.13
73 $2,198.79
85 $4,079.90
97 $5,257.33
62 $1,977.19 74 $2,327.23
86 $4,247.65
98 $5,209.68
63 $2,083.13 75 $2,462.89
87 $4,417.73
99 $5,057.91
64 $2,204.20 76 $2,606.11
88 $4,589.35
100 $4,881.39
65 $2,320.86 77 $2,744.26
89 $4,761.53
101 $4,679.08
66 $2,442.89 78 $2,903.03
90 $4,889.77
102 $4,450.05
67 $2,570.42 79 $3,054.72 91 $5,012.03
103 $4,112.98
68 $2,703.57 80 $3,213.11 92 $5,126.53
104** $3,766.84

* After age 70 and a half, the required minimum distribution rules kick in and require a different life expectancy chart to be used. Participants are permitted a one-time change from the life expectancy payout option to payments based on a specific dollar amount. This would allow larger payments to be elected, but the required minimum distribution amount would be required to continue each year. Here's more information.

** Payments would continue past age 104. In this scenario the account would not be depleted until age 115.

Here are some other things to know about the life expectancy payout option:

  • The balance in the account at death is payable to the account holder's beneficiary.
  • While receiving payments, the account balance still can be transferred among the various TSP investment options.
  • If a final lump-sum payment is desired, the payments can be stopped and the account balance can be paid in cash or transferred to an individual retirement account.
  • You can choose this option at any age without incurring a tax penalty for early withdrawal.
  • Changing from monthly payments based on life expectancy to a fixed monthly payment amount could make you liable for the 10 percent penalty tax on the payments you previously received, if you make the change within five years of beginning your payments or before you are age 59 and a half.

To explore other withdrawal scenarios using a different account balance, different interest rate assumptions, and a different age at the time payments begin, use the calculators at the TSP website.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

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