How Federal Employees Can Secure Lifetime Income from TSP in 2025

How Federal Employees Can Guarantee a Lifetime Payout

If you’re a federal employee aged 60 or older, your Thrift Savings Plan (TSP) is likely a key piece of your retirement puzzle. You’ve saved diligently for years, but now the real challenge is clear: how do you make that money last for the rest of your life?

There’s a powerful option many TSP participants don’t know about, one that can turn your savings into a predictable, guaranteed income stream, giving you peace of mind in retirement. Let’s dive into how it works and why it’s worth considering.

Watch This Short Video First

Need a simple explanation of your TSP income options? This quick video breaks it down clearly, showing you how to create a steady retirement paycheck:

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Understanding the TSP Funds and Their Limits

The TSP offers several funds to grow your retirement savings, each with its own strengths and weaknesses:

• G Fund (Government Securities Investment Fund): Invests in short-term U.S. Treasury securities, making it the safest TSP fund with no risk of losing principal. However, its low returns may not keep up with rising costs over time.

• C, S, I, and F Funds: These funds invest in corporate stocks, bonds, and international markets, offering higher growth potential but exposing you to market ups and downs.

Why Relying Solely on TSP Funds Can Be Risky

While the TSP is a great way to save, depending only on its funds for retirement income has potential pitfalls:

• Market Risk: Funds like C, S, or I can drop in value during market downturns, reducing your savings if you need to withdraw at the wrong time.

• Purchasing Power Risk: The G Fund’s low returns may not keep pace with rising living costs, shrinking your spending power over time.

• Longevity Risk: Without a plan, your TSP savings might not last through a long retirement, especially if you retire early.

• No Steady Paycheck: TSP funds don’t provide built-in, predictable income, making budgeting a challenge.

The Solution: Convert Select TSP Funds Into Guaranteed Lifetime Income

You can transfer part or all of your TSP into an income-producing annuity, a financial contract that delivers consistent monthly payments for life, no matter how long you live or how markets perform. Benefits of a TSP annuity include:

• Guaranteed Income for Life: Ensures you never run out of money, no matter how long your retirement lasts.

• Protection from Market Swings: Your income stays steady, even if stocks or bonds falter.

• Predictable Cash Flow: Provides a reliable paycheck to cover essentials like housing, healthcare, or travel.

• Customizable Options: Some annuities offer features like inflation adjustments to maintain your purchasing power.

This approach acts like a personal pension, complementing your federal benefits and letting you retire with confidence.

Why Federal Employees Should Consider This Now

Planning your TSP distribution can feel overwhelming, but delaying could limit your income options. Acting now gives you more flexibility to create a secure retirement, especially if:

• You’re 60 or older and nearing retirement.

• You’re concerned about outliving your savings.

• You want predictable income beyond your federal pension or Social Security.

• You’d rather not stress about market fluctuations.

Taking action today helps you build a retirement plan that balances security and growth.

Next Steps: Build a Secure TSP Income Plan

Converting part of your TSP into a guaranteed annuity isn’t about giving up growth, it’s about adding certainty to your retirement. A balanced plan with multiple income streams can help you enjoy your golden years without worry.

Here’s how to get started:

• Explore Your Annuity Options: Learn how much guaranteed income your TSP can generate.

• Align with Other Benefits: Coordinate annuity payments with Social Security or FERS for a seamless income plan.

• Reduce Risks: Combine annuities with TSP funds to protect against market and longevity risks.

• Consult an Expert: Work with an advisor to choose an annuity that matches your retirement goals.

Don’t leave your retirement income to chance. Try our Retirement Income Calculator to estimate your TSP’s income potential and see how a guaranteed stream fits your plan.

Ready to secure your future? Schedule a complimentary strategy call today to review your TSP distribution plan and create a retirement you can count on.