Federal employees and members of the U.S. military rely on the Thrift Savings Plan (TSP) as their core retirement account. But when retirement finally arrives, a big question remains: “What should I do with my TSP after I retire?”

Your TSP may represent decades of savings. Whether your goal is safety, income, growth, or a combination of all three, making the right decision is essential for your long-term financial security.

Before choosing a path, it helps to understand how the TSP works. For a refresher, visit:
How Does a TSP Work?

Once you retire, your TSP is no longer restricted by employer rules. You gain full control over how and when to take distributions, whether to move the money, and how to convert savings into guaranteed lifelong income.

What Should I Do With My TSP After I Retire?

Your TSP offers several options in retirement. Each has pros and cons, and each affects taxes, market risk, and income stability. The right choice depends on your goals, age, and risk tolerance.

1. Leave Your Money in the TSP

You can keep your balance inside the TSP after retirement. This may be attractive if:

• You prefer the TSP’s low administrative costs
• You’re comfortable with the existing fund choices
• You want to delay decisions until later

However, there are limitations:

• You only have access to five core funds + L funds
• There are no guaranteed income options
• RMDs must begin at age 73

Many retirees find the TSP too restrictive once they stop working, prompting them to roll funds into an IRA or annuity for more flexibility, protection, and income options.

2. Roll Your TSP Into an IRA

A direct rollover to a Traditional IRA keeps your account tax-deferred while opening access to more investment choices such as ETFs, mutual funds, and managed portfolios.

This is popular among retirees who want more control. But it comes with risk: securities-based IRAs are subject to market volatility. A downturn early in retirement can significantly reduce your savings.

Because of this, many TSP participants move a portion—or all—of their balance into a fixed or fixed indexed annuity for guarantees.

3. Transfer Your TSP to a Fixed or Indexed Annuity

A transfer to a fixed annuity or fixed indexed annuity offers benefits the TSP cannot:

• Guaranteed principal protection
• No market losses—ever
• Guaranteed accumulation (via fixed rates or index crediting)
• Guaranteed lifetime income (your own personal pension)
• Tax-deferred growth continues uninterrupted

To see how to complete this process step-by-step, visit:
How to Transfer a TSP to an Annuity

4. Use a Bonus Annuity to Maximize Income Potential

Bonus annuities can enhance the income base used to calculate your lifetime payouts. This makes them popular among retirees who want higher guaranteed income.

5. Take Cash Distributions

You can withdraw your TSP balance as cash, either partially or in a lump sum. However:

• The entire withdrawal is taxable as ordinary income
• A large distribution may push you into a much higher tax bracket
• Once withdrawn, you lose tax-deferred growth forever

This option is generally avoided unless necessary for large expenses.

6. Annuitize Your TSP Through MetLife (TSP’s Provider)

The TSP offers annuitization through MetLife, but few retirees choose this option because:

• You lose access to your principal permanently
• There is no growth potential
• Rates may be lower than private-market annuities

Many retirees compare private annuity options first—where payout rates are often significantly stronger.

Using an Annuity to Create Lifetime Income From Your TSP

A fixed indexed annuity or MYGA can turn your TSP balance into a predictable monthly paycheck. You choose when income starts, and payments are guaranteed for life—no matter what happens with the market.

Estimate Your TSP Income

Use our calculator below to see how much guaranteed income your TSP can generate.

Should I Keep My TSP in the Market After I Retire?

Market-based accounts provide long-term growth potential—but they also expose you to volatility. Many retirees prefer a blended approach that includes:

• A growth bucket (IRA investments)
• A safety bucket (fixed annuities)
• An income bucket (indexed annuities with lifetime income riders)

This approach protects against downturns while ensuring your essential expenses are covered by guaranteed income.

Request a Personalized TSP Retirement Review

We can help you compare all available rollover and income options so you can create a secure retirement plan that fits your goals.

Related Pages

• How Does a TSP Work?
• How to Transfer a TSP to an Annuity
• How Does a Fixed Indexed Annuity Work?
• Do Annuities Have Fees?
• Best Retirement Income Annuities