TIAA Traditional has two phases. Taken together, they are designed to deliver certainty and income you cannot outlive.
You get competitive interest crediting rates and a guaranteed minimum interest rate when you start putting money into TIAA Traditional. 1 You will never lose money. Part of the guaranteed asset class, TIAA Traditional can help offset the effects of market fluctuations on other assets held in a diversified retirement portfolio.
Retirement Income Phase
Subject to the terms of your employer’s plan, you choose when and how much to convert to lifetime income. You can choose to receive income from TIAA Traditional for the rest of your life. You can also choose options that will continue to pay a spouse or partner if you pass before they do. There’s also the potential for your lifetime income to increase during your retirement years, which may help offset some of the effects of inflation. 1
You can combine lifetime income with other income options, payment frequencies, and payment start dates to meet your retirement income and estate planning needs. For more information, see TIAA’s Income Options video
What are some benefits of TIAA Traditional?
Allocating some of your savings to TIAA Traditional can add stability to your portfolio, can provide competitive returns over all market cycles, and offer certainty that you can receive an income you can’t outlive. While there is no one-size-fits-all formula for allocating retirement dollars among asset types based on your financial objectives, time frame and tolerance for risk, you may want to maintain a well-diversified portfolio that may also include stocks, bonds, real estate and other investments.
In addition, our mission-based approach can provide you with two distinctive additional potential benefits. Like all insurance companies, we are required to set money aside to protect your benefits. However, unlike most other insurance companies, and consistent with our non-profit heritage, to the extent the reserves we set aside prove to be unneeded, they have been returned to retirees to increase the amount of lifetime income they receive initially and over time.
Can I benefit from using TIAA Traditional long before I’m close to retirement?
Yes. Contributing to TIAA Traditional consistently over your working career, instead of waiting until you are about to retire, could help increase the amount of your lifetime income. 3 This is due, in part, to TIAA’s return of contingency reserves that have built up on older contributions. As such, you may want to consider contributing to TIAA Traditional early and often in order to take advantage of this valuable potential benefit.
I'm fairly close to retirement. Is it too late to begin contributing to TIAA Traditional?
No. TIAA Traditional's guaranteed interest can add stability to your retirement savings portfolio. This feature may be especially important as you approach retirement, a time when unexpected portfolio losses may have a greater negative impact on your desired lifestyle in retirement.
In addition, as noted above, the sooner you start contributing the greater the potential for reserves to build up which may increase your lifetime income.
Is my money safe?
Yes. Your contributions in TIAA Traditional and the interest paid to you are guaranteed by the claims-paying ability of TIAA. We are one of only three insurance groups in the United States to currently hold the highest possible rating from three of the four leading insurance company rating agencies: A.M. Best, Fitch, Moody’s Investors Service and Standard & Poor's. 2
Can I get my money out of TIAA Traditional?
Yes. However, TIAA Traditional is designed primarily to help meet your long-term retirement income needs; it is not a short-term savings vehicle. Therefore, some contracts require that benefits are generally paid in 10 annual or 84 monthly installments and, when lump sums are permitted, impose surrender charges on these withdrawals.
These provisions are designed to allow the TIAA General Account, which backs the guarantees and benefits under TIAA Traditional, to invest in longer-term illiquid assets that often offer enhanced returns versus shorter-term, more liquid assets. 4
Other contracts allow full freedom to withdraw and transfer out of TIAA Traditional but the trade-off for increased access has typically been lower interest crediting rates. 1
TIAA has rewarded participants who save in contracts where benefits are paid in installments over time instead of in an immediate lump sum by crediting higher interest rates, typically 0.50% to 0.75% higher. 1,5 Higher rates may lead to higher account balances and more retirement income for you.
For additional information, please check with one of our advisors at 800-842-2252.
What are my retirement income options?
Change to TIAA Traditional allows you to choose from a range of income options that offer flexibility to meet your unique income needs. Subject to the terms of your employer’s plan you can:
- Choose when to convert some or all of your TIAA Traditional savings into income that you (or you and your spouse or partner) can’t outlive. This is a benefit that only an annuity can provide.
- Add a guarantee period so that if you die before the period ends, payments will continue to those you have designated until the end of the guarantee period.
- Combine lifetime income with other income options, payment frequencies and payment start dates to help meet your retirement income and estate planning needs.
- Pair guaranteed lifetime income from TIAA Traditional with income from other sources, such as variable investment products that may provide the potential to capture market upside and hedge against inflation.6
Designing your personal retirement income strategy starts with three steps: create a plan, think long-term and don't go at it alone. We have specially-trained consultants who can help you understand all of the lifetime (and non-lifetime) income options available to you, the impact on your retirement income and the benefits and drawbacks of each. For more information, visit TIAA’s Preparing For Retirement online experience
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