What is TIAA Traditional Annuity?
As a current or former employee of a non-profit or governmental organization, you (and members of your immediate family), have exclusive access to TIAA Traditional Annuity either through your employer's retirement plan and/or through a TIAA IRA. TIAA Traditional is a guaranteed annuity issued by Teachers Insurance and Annuity Association of America (TIAA) that is designed to be a core component of a diversified retirement savings portfolio. It has helped prepare millions of people like you with a solid foundation for retirement.
Contributing to it gives you the dependability and certainty that you will have a "salary" in retirement that can help cover your basic, everyday living expenses without worrying about outliving your income. In up and down markets, TIAA Traditional preserves the value of your savings. In fact, your balance will grow every day – guaranteed.1
Our unique approach, consistent with TIAA's overall mission, may reward you with additional amounts of lifetime income the longer you have contributed to TIAA Traditional. You have the flexibility to choose when and how much to convert to lifetime income so you can be certain you (and a spouse or partner you may choose to include) will have income you cannot outlive – a choice that, aside from Social Security and pensions, only an annuity can provide. Of course, you don't have to convert all of your TIAA Traditional savings to lifetime income, but if you can cover your basic living expenses with Social Security, pensions and income from a TIAA Traditional annuity you may be able to use your other income sources for discretionary purposes.
Keep in mind that an annuity is an insurance contract that provides guarantees. Like all insurance products, the ability to satisfy guarantees is subject to what's referred to as the "claims-paying ability" of the insurance company that issues the contract. As such, TIAA Traditional's guarantees are subject to TIAA's claims-paying ability and additional amounts of interest or lifetime income, when declared, are not guaranteed for periods other than the period for which it is declared.1,2
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.
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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 videoOpens dialog.
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 for as long as you live. 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 sharing the profits approach allows you to benefit from beyond the guaranteed growth and guaranteed income.
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 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?
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.5
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.