July 30, 2013

TSP annuity rates have climbed slowly since March, from the historically low 1.75% to 2.625% in August. Here is the trend over the past twenty-four years:

TSP Annuity Interest Rates, 1989-2013

TSP Annuity Interest Rates, 1989-2013

The 2.625% is still very low, to be sure, but it is a positive trend. It could be a slow-moving one since the Fed wants to keep rates at “exceptionally low” rates until unemployment drops below 6.5% into 2014.

The annuity rate is still lower than many mainstream dividend-paying investment funds, which could serve as an alternative to at least a portion of an annuity investment.