TSP Payday

By Tammy Flanagan

June 25, 2010

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:

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:

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.


By Tammy Flanagan

June 25, 2010

http://www.govexec.com/pay-benefits/retirement-planning/2010/06/tsp-payday/31799/