What is the current TSP annuity rate in 2026?

The TSP MetLife annuity rate in 2026 is approximately 2.9–3.0% (expressed as a monthly payout per $1,000 of purchase price). For a $400,000 TSP balance at age 65, this translates to roughly $1,167/month for a single-life annuity. Commercial SPIAs in 2026 are paying approximately 5.5% — yielding $1,833/month on the same $400,000 at age 65. The gap is driven by how TSP annuity rates are set (OPM's monthly interest rate factor, based on Treasury secondary market rates) versus commercial insurers' broader investment portfolios.

Why do commercial annuities pay more than the TSP MetLife annuity?

Commercial insurers — AIG, Lincoln, Pacific Life, Symetra, Nationwide — invest premium payments across diversified portfolios including investment-grade corporate bonds, real estate, and alternative assets. This allows them to consistently outearn the interest rate factor the TSP uses (OPM's rate, based on Treasury yields). The TSP annuity rate is also constrained by federal procurement rules and MetLife's administrative structure. In 2026, commercial SPIA rates average 5.5% versus the TSP's effective rate of ~2.9–3.0%, creating a permanent ~$666/month income gap on a $400,000 rollover.

Should I take the TSP MetLife annuity or roll over to a commercial SPIA?

For most federal retirees with $200,000+ TSP balances, comparing commercial carriers before annuitizing the TSP is the financially correct move. However, the TSP annuity has specific advantages: (1) no medical underwriting — guaranteed issue regardless of health, (2) simpler rollover process within the federal system, (3) OPM oversight and federal retirement system integration. The decision framework: if you're in excellent health, commercial SPIA wins. If you're in average or poor health, the TSP annuity's guaranteed issue and inflation protection become more valuable. Use our comparison table with your specific balance and age to run the numbers.

What survivor options does the TSP MetLife annuity offer?

The TSP MetLife annuity offers three main options: (1) Single Life — highest monthly payout, payments stop at death, no survivor benefit. (2) Joint & Survivor (50% or 100%) — reduced monthly payment continues to your surviving spouse after your death. A 100% survivor option at age 65 on a $300K purchase typically reduces the monthly payout by 10–15% but guarantees your spouse receives the same amount for life. (3) Life with Cash Refund — if you die before receiving the full purchase price back in payments, the difference goes to your beneficiaries as a lump sum.

Can I roll only part of my TSP to a commercial annuity?

Yes. You can roll a portion of your TSP balance to an IRA and purchase a commercial SPIA with those funds, while keeping the remaining TSP balance for flexibility (lump-sum withdrawals, systematic withdrawals, or future TSP annuity purchase). A partial rollover strategy allows you to lock in commercial SPIA rates for the portion you've annuitized while preserving TSP withdrawal optionality for the remainder. Federal FERS retirees often use this strategy to secure guaranteed income from half their TSP while keeping the other half accessible for healthcare costs or unexpected needs.

TSP Annuity Rates 2026 — MetLife vs Commercial SPIA Comparison

Direct Answer: TSP Annuity Rates in 2026

The TSP MetLife annuity rate in 2026 is approximately 2.9–3.0% — translating to roughly $2.92 per month per $1,000 of purchase price at age 65 (single life). For a $400,000 TSP balance, this means approximately $1,167/month.

By contrast, commercial Single Premium Immediate Annuities (SPIAs) from top-rated carriers (AIG, Lincoln, Pacific Life, Symetra, Nationwide) are paying approximately 5.5% in 2026. The same $400,000 at age 65 yields roughly $1,833/month — $666 more per month, or ~$8,000 more per year.

The TSP annuity underperforms commercial rates because OPM sets the TSP interest rate factor monthly based on Treasury secondary market yields, while commercial insurers invest across diversified portfolios including corporate bonds and alternative assets. This gap persists across all ages and persists until TSP annuity reform — making comparison before annuitization the single most financially impactful decision for federal retirees with $200K+ in their TSP.

Source: TSP.gov, MetLife annuity rate schedules, current commercial SPIA rate surveys (June 2026). Rates shown are single-life, no refund. Your rate depends on your exact purchase date, balance, age, and gender.

The Income Gap on a $400,000 TSP Balance at Age 65

TSP MetLife Annuity

$1,167/month

~$14,000/year

→

Commercial SPIA (Top Carrier)

$1,833/month

~$22,000/year

Difference: $666/month · $7,992/year · ~$160,000 over 20 years

2026 Monthly Payout Comparison — $100K Purchase Price

Sources: TSP.gov (MetLife rates), current commercial SPIA carrier rate surveys. Payments shown are single-life, no cash refund. Access date: June 2026.

Carrier / Option	Est. Rate	Age 60	Age 65	Age 70	AM Best
TSP MetLife (Single Life)	~2.9%	$438/mo	$487/mo	$548/mo	A (Excellent)
TSP MetLife (Joint 100%)	~2.6%	$398/mo	$444/mo	$502/mo	A (Excellent)
AIG — American General	~5.5%	$531/mo	$583/mo	$652/mo	A (Excellent)
Lincoln Financial Group	~5.4%	$526/mo	$578/mo	$645/mo	A (Excellent)
Pacific Life Insurance	~5.6%	$537/mo	$590/mo	$659/mo	A+ (Superior)
Symetra Life Insurance	~5.5%	$531/mo	$584/mo	$654/mo	A (Excellent)
Nationwide Life Insurance	~5.4%	$526/mo	$577/mo	$646/mo	A (Excellent)

🧮 TSP vs Commercial Annuity Calculator

TSP Balance

Your Age at Purchase

TSP MetLife — Monthly

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Commercial SPIA — Monthly

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Your Annual Advantage with Commercial SPIA

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When TSP Annuity Wins vs. When Commercial SPIA Wins

The best choice depends on your health, marital situation, and income needs — not just the monthly payout.

✅ TSP MetLife Wins If:

Health is poor — no medical underwriting required; guaranteed issue regardless of health conditions
Joint survivor needed — want to guarantee a spouse receives income after your death with no additional premium
Want inflation protection — TSP annuity can include COLA adjustments commercial carriers may not
Federal system integration — already in federal retirement system; simpler administrative process
Balance under $100K — rate gap is proportionally smaller; TSP simplicity may outweigh the difference

Consider TSP if health is average or poor

✅ Commercial SPIA Wins If:

Excellent health — no medical exam required for either, but commercial rates better compensate for longevity
Maximizing income — want the highest monthly payout from your retirement savings
Single or spouse well-provided-for — no joint survivor needed; take the highest single-life rate
Large balance ($200K+) — income gap scales proportionally: $500K = $833/mo more from commercial
Tax diversification — rolling TSP to IRA gives you more flexibility on Roth conversion strategy

Consider commercial if balance is $200K+ and health is good

Compare Real SPIA Quotes — Free, 2 Minutes

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Why the TSP MetLife Annuity Underperforms Commercial Rates

The TSP annuity rate is set by the Office of Personnel Management (OPM) using a formula tied to Treasury securities yields in the secondary market. Each month, OPM publishes a new interest rate factor — and that factor directly determines your monthly payout per dollar of purchase price. In 2026, this rate has hovered around 2.9–3.0%.

Commercial insurers — including AIG, Lincoln, Pacific Life, Symetra, and Nationwide — set their SPIA rates based on their actual investment returns across diversified portfolios: investment-grade corporate bonds, government securities, real estate, and alternative assets. In the current interest rate environment, these carriers can consistently achieve 5.4–5.6% on their annuity portfolios — almost double the TSP rate.

The structural difference: TSP is a federal government benefit program designed for simplicity and federal employee integration, not for maximizing annuity payouts. MetLife was selected through federal procurement, not rate competition. This is not a criticism of MetLife — they're a top-rated insurer — but their rate is structurally constrained by how TSP annuity pricing works.

The implication: If you annuitize your TSP through MetLife instead of comparing commercial carriers first, you're leaving thousands of dollars per year on the table — permanently, for the life of the annuity. There's no TSP MetLife rate reform on the horizon that would close this gap.

Partial Rollover Strategy — Don't Put All Your Eggs in One Basket

Federal retirees with large TSP balances ($500K+) can consider a partial rollover strategy: annuitize $250K via the TSP (guaranteed income floor, no medical underwriting) and roll the other $250K to a Traditional IRA, purchasing a commercial SPIA with better rates. This gives you:

A guaranteed income floor from the TSP annuity regardless of market conditions
Higher monthly income from the commercial SPIA on the IRA portion
Retirement savings flexibility for unexpected healthcare or capital needs
Tax diversification — managing RMDs from remaining IRA balance

A fee-only fiduciary financial advisor or ChFEBC can help model the exact split based on your FERS pension, Social Security estimate, and total retirement income picture.

Frequently Asked Questions

Is the TSP annuity irrevocable?

Yes. Once you purchase the TSP MetLife annuity, the decision cannot be reversed — you cannot change the annuity type, convert to a lump sum, or recover your premium. Commercial SPIAs are similarly irrevocable, which is why comparison before purchase is so critical.

Does the TSP annuity include inflation protection?

The TSP annuity can include a Cost-of-Living Adjustment (COLA) option, which increases payments annually based on CPI. This comes at the cost of a lower initial monthly payout (roughly 15–20% lower). Commercial carriers typically offer inflation riders at varying costs. If inflation protection is important to you, factor this into your comparison.

What credit ratings do commercial annuity carriers have?

All carriers listed in our comparison table hold AM Best ratings of "A" (Excellent) or "A+" (Superior) — the highest tier of financial strength. Annuity payments from A-rated carriers are considered extremely reliable, with regulatory state guarantee funds providing additional consumer protection.

What about taxes on the TSP annuity vs commercial SPIA?

Both TSP annuity payments and commercial SPIA payments are taxed as ordinary income in the year received. There's no tax advantage to one over the other — the decision is purely about maximizing the monthly payout from the same premium amount.

Sources & References

TSP.gov — Annuity Rates and Purchase Options (accessed June 2026)
OPM — TSP Annuity Administration
IRS Publication 590-B — IRA distribution rules
Blueprint Income — commercial SPIA rate comparison (accessed June 2026)

Related Tools & Guides

Live TSP & Annuity Rate Tracker — current TSP fund returns, SPIA/MYGA rates, personalized comparison
FERS Annuity Calculator 2026 — High-3, TSP, sick leave → monthly pension estimate
Annuity Calculator — compare SPIA vs MYGA rates for your retirement income plan
TSP vs Commercial Annuity — deeper comparison with federal-specific scenarios
Federal Employee Retirement Stack — full federal retirement planning hub

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TSP Annuity Rates 2026 —MetLife vs Commercial SPIA Comparison