Annuity may be best choice


Q: I retired in 2006 at the mandatory age of 57 under the Civil Service Retirement System/Federal Employees Retirement System. I am able to live comfortably on my monthly annuity and have not made any withdrawals from my Thrift Savings Plan account, which remains in the L2030 fund and now totals approximately $250,000. I would like to start withdrawing from the account in the next year or two to add to my quality of life, and not for living expenses. Does it make more sense to take monthly withdrawals rather than buying an annuity since I am not overly concerned about outliving my TSP account and I can live comfortably on my monthly annuity?

A: There is no one-size-fits-all answer to your question. Your choice will depend upon your specific goals and risk tolerance. Given the current interest rate environment, you would likely be locking in a relatively low payment by purchasing an annuity right now. That, combined with your stated indifference to a guarantee of lifetime income, makes it unlikely that an annuity will be a good choice for you, at least until interest and payout rates rise. Of course, without the annuity, you risk the consequences of mismanaging the money.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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