Know the actual value of a FERS and TSP annuity

When we say that the majority of the federal officers will not have a million dollars (or more) in their TSP Accounts when they retire, we back our statement with facts. Researchers have revealed that only .5 percent of all the officers have over a million dollars in their TSP accounts.

KNOW MORE ABOUT YOUR TSP AND FERS ANNUITY:

When we talk about retirement income though, there is a huge possibility for the federal officers to generate the income that would absolutely have a requirement of possessing an investment portfolio of at-least, if not more than a million dollars. Let’s take an example. An employee that is a member of the FERS has around 30 years of service under his belt. His high three salary is 90 grand on average. If this person undergoes retirement at 62, then he would be receiving an annuity of around 29,700 dollars every year.
Now, the question here is this: How much will this person have to invest if he intends to generate 29 thousand and 700 in investment income? If we assume that the withdrawal of the account has a value of 4 percent, then the investment portfolio would have a value of around 742, 500 dollars.
Now if we consider that the person has collected around $400 thousand dollars in their TSP after spending 30 years in service. If he takes a 4 percent withdrawal every year during retirement, this would present him with a surplus 16 thousand dollars.
Now, between the FERS and the TSP annuity, the person would receive 45,700 every year, and if you are wondering, it would take around $1,142,500 dollars to generate that type of investment income.
All of this needs to be kept in mind along with the realization that the following deductions will no longer be there once you retire:
1. Medicare Tax
2. FERS Retirement
3. TSP
4. Social security taxes