The TSP Calculator
The website for the Thrift Savings Plan has a number of calculators to help people who work for the government. The calculators can help you estimate how much your contributions will grow. How taxes will affect you, how much retirement income you can expect, and how much your loans will cost.
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How Much Will My Savings Grow?
You can estimate the growth of your TSP account by figuring out how much it will grow in the future and how much it has grown so far.
How Much Can I Contribute?
The IRS limits the amount of money you can save in tax-deferred accounts each year. This limit is called the limit for elective deferral. People can use this calculator to work out how much they should deduct from their pay each period to contribute the most money possible. If you are a FERS employee, you should use this calculator to ensure you don’t miss out on Agency Matching Contributions.
Use this tool to figure out how much you will save by putting money into your TSP account. You can also use the Contribution Comparison Calculator to determine which type of contributions (traditional and Roth) will help you reach your retirement goals.
Contribution Comparison Calculator
The Contribution Comparison Calculator can help you figure out how the tax treatment of your employee contributions affects your paycheck. With Roth TSP contributions, you make contributions with after-tax income. That means you pay taxes on the money now, but in retirement, you won’t have to pay taxes on withdrawals. The traditional TSP lets you make contributions before taxes are taken out of your income. That means you don’t have to pay taxes on the money now, but you will have to pay taxes on withdrawals in retirement.
The Contribution Comparison Calculator will help you decide if Roth TSP is right for you. Roth TSP contributions are taxed when taken out, while traditional TSP contributions are not. Remember that if you choose to contribute to both Roth and traditional TSP accounts, your combined contributions cannot exceed the elective deferral limit.
TSP Payment and Annuity Calculator
Two ways to get monthly income from your TSP account when you leave federal service are through monthly payments or a life annuity. This TSP calculator will help you decide which option is right for you by comparing the available options and features that might meet your needs.
TSP Installment Payment Calculator
If you currently receive monthly payments and want to choose a different amount, use this calculator to estimate. How many payments will you receive, and how long will they last?
This calculator can also help you compare the TSP monthly income options (including monthly payments and life annuities).
Estimate Loan Payments
The TSP Loan Calculator helps you estimate how much your loan payments will be. The calculator considers the amount you want to borrow, the current loan interest rate, and other factors. You must be a federal employee who is paid to borrow from your TSP account. If you qualify for a TSP loan, the most you can borrow is $50,000, and the least you can borrow is $1,000.
TSP Withdrawal Calculator
There are different types of TSP withdrawal calculators that you can use to figure out what is best for you. You can take out all of your money or part of it. The most important question is how much money you will get each month and how much income you need in retirement.
To have the TSP calculate your monthly payment, you need a minimum account balance of $200. A minimum of $25 is required each month for income. The Life Expectancy Tables given by the Internal Revenue Service will be used to calculate the amount of your regular payment. This computation will be carried out annually at the same time. It will consider your age and the amount of money in your account.
If you want to know how much money you will get every month and for how long, you can use the TSP Monthly Payments Calculator.
TSP Annuity Options
The TSP annuity calculator can help you see how each choice would affect the amount of your payment during your life expectancy. And (if you choose a survivor option) your survivor’s remaining life expectancy.
What Is a TSP Annuity?
(The Thrift Savings Plan) TSP is a retirement plan available to federal government employees in the United States, including civil and military service members. The Federal Retirement Thrift Investment Board administers the plan.
When you retire, one way to get money is to buy an annuity with the money you saved in your TSP account. An annuity is a life insurance policy that pays you a fixed amount each month, which can help you live more comfortably during your retirement years.
When you acquire a TSP life annuity, you buy an immediate one. It is an annuity where you pay one large sum of money upfront.
There are numerous funds to choose from, each with its own investing goal and risk tolerance level. The TSP funds are diversified and offer high and low-risk options. They are well managed and charge reasonable rates.
The TSP provides the following funds, ranked from most conservative to most aggressive:
- Government Securities Fund (G Fund) Is a fund that invests in short-term stable U.S. debt securities with a modest yield.
- Fixed Income Fund (F Fund) – This Fund attempts to replicate the performance of the Bloomberg Barclays U.S. Aggregate Bond Index. It also includes exposure to municipal, corporate, and government bonds and mortgage-backed securities.
- The C Fund – tracks the performance of the Standard & Poor’s 500 Composite Stock Price Index (S&P 500).
- The Small Cap Stock Fund follows the Dow Jones U.S. Completion Total Stock Market Index (S Fund).
- International Stock Fund (I Fund) – tracks the performance of the MSCI EAFE Index (Europe, Australasia, and the Far East). The most volatile of the TSP benchmarks.
Why Should You Consider A TSP Annuity?
You already have an annuity if you retire from the military. It is because you receive a military pension which includes a COLA (cost of living adjustment), a survivor benefit plan, and payments from the world’s most reliable agency. You cannot find a better annuity than your pension, so another one might not be worth the money.
The TSP annuity is a good deal. However, suppose you do not require the money from your military pension to pay your essential living expenditures. In that case, you may wish to retain ownership of your TSP assets. Even the most conservative financial experts suggest annuitizing only a portion of your retirement income, not the entire amount. You give up some control over the money with a TSP annuity, but it is safe.
You can withdraw your TSP funds in almost any combination of a single payment, monthly installments, and annuity. When you purchase a TSP annuity, you forego a lump payment that you could have utilized for other purposes. (such as long-term care) or passed on to your heirs.
You would be unable to use your TSP funds for things like a new roof, caring for a loved one, or a fantasy vacation. Instead, you would have to save money out of monthly annuity payments. However, suppose you use other withdrawal methods from your TSP account. In that case, your funds will continue to grow and probably outperform an annuity.
Is A TSP Annuity A Good Idea?
You may consider getting a TSP annuity if you have a military pension. It is an option that can protect your money from being wasted or used in a lawsuit. However, it’s worth taking some time to explore other options with a financial adviser or on Early-Retirement.org before making your decision.
If you don’t have any other income from pensions, a TSP annuity can be an excellent way to protect yourself. It’s one of the best safety nets in the world. However, you don’t want to annuitize your income too much. Most retirees should be able to meet all their living expenditures with their annuity (plus Social Security). More than just cat food, but not as much as you might expect.
There are many different types of investments that you can make with the money you have left. You can invest in things that will help fight inflation, like TIPS or I bonds. If at some point you decide that you don’t feel comfortable with this, you can always buy more annuities. But once you buy a TSP annuity, it’s a final decision.
Several things affect how much your TSP annuity payment will be. It would help to think about these things before deciding whether to buy an annuity. Some of the things to consider include:
- Your age when you purchase the annuity
- A single-life annuity vs. a joint-life annuity
- If you choose a shared annuity, the joint annuitant’s age will be considered (or co-owner of the annuity).
- The sum of money needed to buy the annuity
- The interest rate at the time you purchase the annuity
- Determining level payments vs. increasing payments
How Is TSP Annuity Calculated?
There is a wide variety of alternative annuity choices available to pick from. The TSP annuity calculator can help determine how each would affect your monthly payment. It includes how it would change during your life expectancy and (if you choose a survivor option) your survivor’s life expectancy.
The annuity payment can be made with or without a cost-of-living adjustment (COLA). The COLA option implies that every year, the payments will increase by the amount of inflation measured in the Consumer Price Index (CPI) up to 3%. This option will also minimize your initial annuity payment. Still, that reduced amount will stay valuable for much longer.
Suppose you have tax-exempt contributions in your TSP account (from a combat zone). In that case, the annuity vendor will track how much of the contributions are taxable and tax-free. They will report this information in your annual tax statement.
The TSP acquires your annuity from a big vendor, such as Metropolitan Life when you apply for it. Because the federal government purchases many annuities from these vendors, the vendors offer their annuities at lower costs and commissions. However, this low price comes with a catch: you can’t back out later if you decide you don’t want the annuity.
If the TSP buys your annuity, you can’t cancel it or change its option. You also can’t change the joint annuitant. It might be possible to exchange an annuity for another from a different company or sell the payments stream to a third party. Still, there are a lot of restrictions that might make it ineligible for the secondary market.
The survivor and COLA benefits might be better than getting a TSP annuity. If you are receiving a military pension, If you decide to buy a TSP annuity, make sure only to buy the minimum amount you need. And think about how the interest rates will affect your decision. It can be hard to time an investment decision. Still, you get a higher annuity payment when interest rates are high. You may want to wait as long as possible before buying a TSP annuity or buy smaller annuities from other companies over time.
What Is The Current TSP Annuity Rate?
The timing of your annuity purchase affects how much money you will have to pay. Annuity companies calculate the value of an annuity using an “assumed interest rate.” It functions in the same way that a mortgage does. When interest rates are high, so are your payments. When interest rates are low, so are your payments.
The interest rate for an annuity can change based on a moving average of 10-year U. S. Treasury bonds. It happens every month.
You can explore annuity estimates by changing the type of annuity you want to buy or buying an annuity with different withdrawal options. In recent years, interest rates have ranged from 3.125% (November 2018) to 1.375% (September 2016).
The Benefits and Drawbacks of a TSP Annuity
You should think about some of the pros and cons of TSP annuities. These are just a few examples, so you’ll need to do more research to see how they apply to you specifically.
- You don’t have to pay taxes on your earnings or contributions until you take the money or start receiving payments. It lets the account grow faster.
- You have a variety of financial possibilities to select from. Some are more stable and conservative, while others are more aggressive and volatile.
- TSP annuities are a retirement savings plan that employees pay into. The scheme is partially funded by partially matching contributions from the U.S. government.
- You can choose to buy an annuity by yourself or with someone else. If you decide to have someone else, it can be a family member or business partner. You will need to have an “insurable interest” with that person.
- Overall, TSP annuities remain one of the most secure long-term investments.
- You can decide whether or not your annual annuity payout increases. If you choose to have it grow, it will go up by up to 3% each year, based on how much the cost of living goes up.
- You can begin withdrawals at any time, but if you’re under 59.5 years old, there will be a penalty.
For some participants, more volatile fund selections may pose an unacceptable risk.
Other investment vehicles may provide a higher rate of return.
TSP annuities are subject to several restrictions that may preclude them from selling in the secondary annuity market.
When you purchase a TSP annuity, you forego a lump payment that you could have used for other necessities.
- Accepting a TSP annuity is an irreversible decision.
Frequently Asked Questions About TSP Calculator
TSP participants have one significant advantage over most 401(k) investors: lower fees. The total expense ratio, which covers investment and administrative costs, is 0.055% for individual TSP funds.
You can retire with $600,000 if you plan carefully. But think about how long that money will last. That depends on how much money you need each month and when you want to retire.
Most people who invest in the Thrift Savings Plan are smart. About 75% contribute at least 5% of their pay to get the full match from their agency or service. Remember that the match your agency or service puts in your account is considered a traditional contribution, which will be taxed when you retire.