TSP MetLife Annuity: Life Annuity Options, Rates, and What You Give Up

How the TSP Life Annuity Works

The TSP's life annuity option converts a portion (or all) of your account balance into a guaranteed monthly income stream through a contract with MetLife, the TSP's exclusive annuity provider. Once purchased, MetLife pays you a fixed amount every month for the rest of your life.

The minimum purchase is $3,500, and it applies separately to your traditional and Roth balances. If you want to annuitize both, each must meet the $3,500 minimum independently.

Unlike other TSP withdrawal options — partial withdrawals, installments, or rollovers — the annuity is fundamentally different in one respect: you permanently transfer ownership of the capital to MetLife. The money is no longer in your TSP account. You can't change your mind, access the principal, or leave the capital to heirs (unless you select a survivor option at purchase).

The Annuity Options Available

When you purchase a TSP life annuity, you choose from several configuration options that affect the payment amount, how long payments last, and what happens after your death:

Single life annuity. Pays you for your lifetime. When you die, payments stop entirely. This option produces the highest monthly payment because MetLife's liability ends with you.

Joint life annuity with spouse. Pays a reduced monthly amount during your lifetime, then continues at 50% or 100% of that amount to your surviving spouse for their lifetime. The 100% survivor option pays less per month upfront than the 50% option because MetLife is guaranteeing a longer payout.

10-year certain feature. Guarantees payments for at least 10 years, even if you die sooner. If you die in year 3, your beneficiary receives the remaining 7 years of payments. This reduces your monthly amount compared to a straight life annuity, but provides a safety net against dying shortly after purchase.

Cash refund feature. If you die before receiving payments equal to your original purchase amount, your beneficiary gets the difference as a lump sum. If you put in $200,000 and received $40,000 in payments before dying, your beneficiary gets $160,000. This also reduces the monthly payment.

Increasing payments. An option that increases your payment by a fixed percentage annually to partially offset inflation. The starting monthly amount is lower than a level-payment annuity, but it grows over time.

You can combine features — for example, a joint life annuity with a 10-year certain period. Each addition reduces the monthly payout because MetLife assumes more risk.

The 2026 Cancellation Window

One recent change that reduces the stakes: the 2026 MetLife contract includes a 3-year cancellation option. If you change your mind within three years of purchase, you can cancel the annuity and receive a refund of your premium minus any payments you've already received.

This is a significant shift from the traditional annuity model where the purchase is completely irrevocable from day one. It gives you a trial period to see whether the annuity payments fit your actual retirement spending pattern before you're locked in permanently.

Monthly Payout Math

MetLife doesn't publish a fixed rate card the way a bank advertises CD rates. Your monthly payment depends on your age at purchase, the annuity options you select, current interest rates, and the amount you convert.

As a general guideline, a 62-year-old purchasing a single-life, level-payment annuity with no survivor features might receive roughly $500-600 per month per $100,000 invested. Add a joint life option with 100% survivor benefit and the payout drops, often to $400-500 per month per $100,000.

The exact amount is calculated at the time of purchase and locked in permanently (unless you chose increasing payments). The TSP's online tools provide estimates before you commit.

Annuity vs Installments: The Core Tradeoff

The practical question most retirees face isn't whether to annuitize — it's whether to annuitize vs. taking TSP installment payments.

Installment payments let you set a fixed dollar amount (minimum $25) paid monthly, quarterly, or annually, or choose payments based on IRS life expectancy tables. You retain full ownership of your TSP balance. The remaining balance stays invested in TSP funds. You can change the amount, frequency, or stop payments at any time. And whatever is left when you die goes to your beneficiaries.

The annuity guarantees income no matter how long you live — even if you live to 105 and your installment-payment peers have exhausted their accounts. But you give up control of the capital, and in most configurations, payments stop or reduce at death.

The annuity makes the most sense for retirees who prioritize longevity insurance — certainty that they won't outlive their money. Installments make more sense for retirees who want flexibility, expect to leave assets to heirs, or believe they can manage their own drawdown to last.

Most federal retirees already have a guaranteed income floor from their FERS or CSRS annuity plus Social Security. Adding a TSP life annuity on top provides a third layer of guaranteed income — reassuring, but not always necessary given the base already in place.

Tax Treatment

Traditional TSP annuity payments are taxed as ordinary income, just like any other traditional TSP distribution. Roth TSP annuity payments are tax-free if the Roth 5-year requirement has been met and you're 59½ or older.

The TSP withholds federal income taxes on annuity payments based on OPM/IRS annuity tables. You can adjust withholding through the My Account portal.

Weighing All Your Withdrawal Options

The TSP Withdrawal & Drawdown Strategy Guide compares every post-separation distribution method — annuities, installments, partial withdrawals, and direct rollovers — with the tax implications, spousal consent requirements, and reversibility constraints for each, so you can evaluate the tradeoffs against your own retirement income picture.

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