NEW YORK – July 20, 2022 – The same conditions that made the TIAA CREF variable annuity so revolutionary when it was introduced in July 1952 are again demonstrating the value of the innovative solution on its 70th anniversary.
Between 1940 and 1950, Americans faced skyrocketing inflation that almost halved their purchasing power. At the same time, life expectancy in the U.S. was steadily rising. To tackle the potential retirement shortfall, TIAA came up with a retirement offering that provided an opportunity for both growth and lifetime income: the world’s first variable annuity, now known as the CREF Stock Account.
The CREF Stock Account was the first account offered of the current eight investment options CREF offers today. The CREF lineup includes eight different investment options, representing all asset classes and management styles, using multiple approaches to investing.
“When the CREF Stock Account was developed, the economy faced great inflationary pressures, just like today,” said Colbert Narcisse, TIAA’s Chief Product & Business Development Officer. “Even moderate inflation can be devastating in retirement. A diversified retirement portfolio that includes lifetime income from both fixed and variable annuities can offer the confidence of having adequate income for life.”
TIAA’s CREF variable annuity offers seven other investment options, in addition to the CREF Stock account, including strategies in equity, fixed Income, money market and a balanced fund.
Diversified Income Approach
CREF is designed to be paired with TIAA Traditional, a fixed annuity that allows participants to create a diversified retirement income strategy that meets their individual retirement-income needs. A fixed annuity can provide a reliable income floor to pay for essential expenses and supplement other guaranteed income sources, like Social Security. Variable annuities, on the other hand, offer the opportunity for growth to help investors cope with rising costs over the length of their retirement and provide payments for life.
From 2020-2021, for example, variable annuity income payment increased by over 60% for annuitants who receive income from equity accounts, like the CREF Stock account— the highest year-over-year increase since CREF’s inception. The recent market swings highlight the importance of a well-diversified asset allocation strategy that can help give people the confidence to remain invested in the market, even during times of increased volatility, and help outpace inflation over the long term.
CREF accounts offer:
- Opportunity for growth - Professionally managed investment options designed to provide long-term performance and opportunity for growth through equity exposure.
- Lowest fees in the industry - CREF accounts have the lowest expenses among all variable annuities, and even offer expense ratios lower than the average mutual fund.1
- Lifetime income - CREF annuitants typically receive monthly income that has been historically higher than the “rule of thumb” withdrawal rate of 4%.2 Also, payments can increase over time to help address the rising costs of living.3 This benefit has provided a secure retirement to millions of customers over the last 70 years.
“Seventy years on, CREF continues to be an important part of helping people enjoy a secure retirement,” said Narcisse. “With inflation threatening to eat away at the value of savings, CREF is reassuring to our millions of participants, who know they can count on lifetime income.”
TIAA is a leading provider of secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions. It is the #1 not-for-profit retirement market provider4, paid more than $6.4 billion in lifetime income to retired clients in 2021 and has $1.3 trillion in assets under management (as of 3/31/2022)5.