Consider turning a portion of assets into income you can’t outlive

People are living longer, and accordingly, retirement is lasting longer—30 years or more for many. So make sure your retirement income plan has the same longevity, which means creating an income stream that lasts as long as you do. Annuities are designed for retirement. They offer several payment options, including lifetime income.
Fixed annuity guarantees are subject to the claims-paying ability of the issuing company. Variable annuity payments are not guaranteed and will fluctuate based on the performance of the underlying investments.
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Income you can’t outlive: Herb’s story

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The planning for retirement, there are really two major aspects to consider.The first aspect is you must begin to think about what will you be doing upon retirement.

I'm not an idle person. I've got to keep active. I work out. I do upper body three times a week and jogging.

And the other side of it of course is the financial. I think you will find that upon retirement, there's so many other financial issues that you did not think of. I can't emphasize that enough.

I had preplanned to have my living expenses taken care of through my annuities. I have a fixed annuity with TIAA. It lasts through a lifetime, so I know exactly what I'm going to get month after month after month.

I urge everybody when they're approaching retirement, do some careful thinking.

The benefits

A solid foundation

Help make your retirement vision a reality with the confidence of having income for as long as you need it. Use lifetime income to create a foundation — or an “income floor” — designed to cover everyday expenses throughout your lifetime. This can be done by figuring out the cost of your essential needs in retirement, and then finding sources of income to fund them. There are many benefits to building an income floor into your retirement plan:


Help generate retirement income for yourself that meets your personal needs and covers your essential expenses.


Rest easier knowing that you have income you can never outlive.


Having income in retirement you can’t outlive allows greater flexibility for the remainder of your investment portfolio to potentially meet unforeseen needs.
By the numbers

79% of Americans say having a guarantee of monthly income for the rest of their life is important to them.

Source: 2016 TIAA Lifetime Income Survey
Where to find it

Income that doesn't miss a beat

There are three potential places to find income in retirement. Social Security is certainly an important one. Another, if you are among the fortunate few, is a defined benefit pension through work. Beyond that, annuities are the only investment that can be used to provide income for life.

Guarantees are based on the claims-paying ability of the issuer.

Social Security

To maximize monthly benefits from the government, consider starting your claim at full retirement age or later. Spouses should plan together to make the most of spousal benefits.


Today, fewer than 20% of American workers are offered a defined benefit pension like your grandparents may have had. If you have one, it should be included in your income plan.


An annuity can help bridge gaps you may have when it comes to income you need to cover everyday expenses. You can choose when and how much of savings to convert to lifetime income.

People with lifetime income from annuities are more likely to have a retirement lifestyle that has exceeded expectations

Lifestyle graphic
Source:   How Retirees Manage Retirement Savings for Retirement Income: A Survey of TIAA-CREF Participants by the TIAA-CREF Institute
What is an annuity?

An annuity can be a cornerstone of retirement

An annuity is a product offered by an insurance company that can generate a lifetime income stream in retirement. Annuities come in many flavors—some that pay just you, you and a partner, or you can add an option to ensure payments to beneficiaries during a specified period of time. Depending on the type of annuity, your income can be fixed or variable. Your initial income amount will be based, in part, on which options you choose.
Annuity basics

How annuities work


You put money in

During the accumulation stage, your funds accumulate tax deferred until you choose to start income.

With variable annuities, your money will be subject to the risks associated with investing in securities, including loss of principal.

You choose how to take income

At retirement, you can decide to start income. Options can include income that will last as long as you live, a "fixed period" (which is a specified period of time), a full lump-sum or ongoing systematic withdrawals.  Talk to your institution because options may vary depending on your plan.

You can make adjustments

Many people choose to turn just a portion of their assets into lifetime income to start and then convert more over time based on their needs. Additionally you may have some flexibility to make transfers between annuity accounts, with some restrictions, after you start taking income.  You’ll want to check your contract details.
Lifetime income is the annuity’s major attraction as a retirement income option.
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How annuities can help

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Annuity Basics

As a TIAA participant, you have exclusive access to income solutions that offer choice, confidence and flexibility: our TIAA and CREF annuities. But what exactly is an annuity? How does it work? Why might you need one?

This short video will help answer some of those questions � starting with why you might need one.

Today's retirees are faced with many risks, such as living longer, market volatility, and rising medical costs. How can you make sure that you won't run out of money to cover your basic living expenses?

Historically, retirement income consisted of defined benefit pensions, Social Security, and savings. But today, employer pensions are declining*, and the average Social Security payment is only $1300 per month � generally not enough to cover most Americans' living expenses**. Your savings may decrease due to market risks and, combined with the fact that we are living longer, there is the chance that you might run out of money.

So � the need for a dependable income that cannot be outlived is imperative. What can you do to help address these risks? The answer may be an annuity that can provide an income you can't outlive.

But what exactly is an annuity? An annuity is a financial product designed for retirement purposes. It can help you accumulate funds while you're working, and create a stream of income once you retire.

In fact, other than pensions, annuities are the only retirement products that can provide a stream of income you cannot outlive.

Two common types of annuities are fixed and variable. Lifetime income payment amounts can be guaranteed (subject to the issuing company's claims paying ability) if taken from a fixed annuity or they may vary depending on market conditions if taken from a variable annuity.

Let's look at a quick example to see how they work. Meet Sally and Nancy, who are twin sisters. They started work on the same date, have the same salary, and have the same monthly expenses.

Both have saved exactly the same amounts for retirement, $500,000 each. But here's where they differ:

When they retire, at age 65, Sally puts her $500,000 in TIAA Traditional, a fixed annuity, and Nancy does not. Nancy chooses to receive lifetime income for just herself, which means she'll get $2,700 per month, for as long as she lives. This payment amount is based on current TIAA mortality and assumes a 3.5% interest rate.

Nancy takes the same $2,700 payment amount each month using systematic withdrawals. For this example we assume Nancy's account balance, considering the withdrawals, earns 3.5% each year.

Nancy wants to be able to change her withdrawal amount and frequency as circumstances change, and she also wants to leave any money that's left in her account to her children. But in this example, because she does not have an income she cannot outlive, you can see that she will deplete her savings by the time she is 85 years old.

The reason for this is simple: By purchasing an annuity, Sally shares the risk of living too long with a pool of other annuity customers, while Nancy is on her own.

Now, some people believe that when you convert assets to an annuity and then you die early, you lose that money. That is not necessarily the case.

While it's true that some of the choices made after beginning lifetime income cannot be changed, Sally is not obligated to convert her entire account balance to lifetime income. She can "annuitize" enough to cover her basic expenses and leave the rest available for discretionary spending.

Plus, Sally can elect to receive payments for herself and a loved one. And she can add a guarantee period so that payments will continue to a beneficiary should she (and her loved one) die before the specified period ends. Her income amount will vary depending on the options she chooses, but they will continue if she lives longer than expected.

By contrast, Nancy retains full access to her all of savings, but there is a chance that she could outlive her money.

As you prepare for the future, consider including an annuity in your income plan. You can cover your essential expenses such as housing, utilities and food by converting a portion of your assets to an income you cannot outlive. The remainder of your retirement savings can be used for discretionary or unexpected expenses, or converted to lifetime income at a later time.

TIAA offers you flexibility to adapt your income plan as your needs change throughout retirement.

For nearly a century, we've been helping people like you create pathways to and through retirement.

There's no better time than now to contact your dedicated TIAA consultant, or call us at 800-842-2252, to learn how we can help you.

*Source:,, social security bulletin, vol 69, The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Income of Baby Boomers

**Source: Social Security Administration, 2014,

Income options

Your income, your choices

Annuities can provide a wide range of flexible income arrangements that may differ depending on whether you have a fixed or variable annuity. Here are some of the key differences between the two:

Income Options from Fixed and Variable Annuities

  • Can be set up for just you or you and a partner.
  • Income can be for life or a set period of time.
  • Income may be accessible in other ways such as systematic withdrawals depending on your contract;
  • Income tax will be due at the time income or withdrawals are taken, plus a possible federal 10% penalty if you make a withdrawal before age 59½.
  • Once you set up lifetime or period certain income that balance is not available for income under other distribution options.
  • You cannot change the annuity option or annuity partner once you begin receiving income.
  • Features can be added to allow income to continue to beneficiaries for a specified period; adding this benefit will reduce the initial income amount.

How They May Differ

  • Fixed annuity income is consistent, reliable and guaranteed. For a fixed annuity the insurance company, not contract owner, assumes risk.
  • Variable annuity income has the potential to grow over time yet may fluctuate based on underlying investment performance. You assume the decision making for the investments.
The contract value of a deferred variable annuity is subject to market fluctuations and investment risk so that, when withdrawn, it may be worth more or less than its original value.
Investing in an immediate variable income annuity involves risk of loss and the amount of each payment is not guaranteed and will fluctuate.
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Income options

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Income Options in Retirement

Meet John … he's 10 years away from retiring and he's thinking about how much income he'll need, when he'll need it, how frequently he should get it and where that money will come from.

John has a retirement plan that offers TIAA annuities through his employer. The good news is that the options under his employer retirement plan offer John choice, confidence and flexibility to help meet his income needs.

John can choose from a spectrum of income options to create his own income plan. He can convert portions of his assets at different times — some now, some later — and has the flexibility to combine different income options to suit his financial needs.

Depending on the options he chooses, John can determine the frequency and amount of his payments. Let's take a closer look, beginning with the choice that provides the most certainty: Lifetime Income.

If John selects lifetime income, he'll receive a stream of monthly payments that he cannot outlive, much like a pension. Under the terms of his plan, John can turn a portion of his accumulation into income he can't outlive — a choice many plan investment options may not provide.

The amount of John's lifetime income payments can be steady and reliable through a fixed annuity, such as TIAA Traditional, or his lifetime income payments may vary upwards or downwards if he chooses one of TIAA's Variable Annuities.

John could also choose a combination of both fixed and variable payments. But with either choice — he'll never outlive his income!

John can use some of his retirement savings to generate guaranteed income to help cover essential or everyday expenses such as housing, food, and utility bills.

John can elect to receive payments for just himself, or for him and a loved one. It ensures they will each have income for as long as they live. He can also add a guarantee period so that payments continue to a beneficiary should he (and his loved one) die before the specified period ends.

And although John cannot change some of the choices he's made after beginning lifetime income, he can retain control and flexibility. For example, he can make transfers to other annuity accounts, with some restrictions, in response to changing market conditions or inflation.

We understand that people have diverse needs, so we offer many choices. John may want to combine lifetime income with other options to create a customized income plan. For example, if John needs income for a specific time period, say until his mortgage is paid off, he can choose to receive fixed period payments for a duration of up to 30 years.

John can also add flexibility to his income plan with systematic withdrawals to cover discretionary costs such as travel or home improvements.

With this systematic withdrawal option he can choose the amount and frequency of payments, monthly, quarterly, semiannually, or annually and also change them anytime. He can start and stop payments whenever he likes and even switch to another income choice at any time.

He can also leave a portion of his retirement savings untouched. If necessary he can take a cash withdrawal of all or a portion of his savings to cover unforeseen expenses like car repairs or large health care expenses. Whatever is left, he has the flexibility to leave it in his is account and withdraw it at whatever pace he desires, or convert it to a stream of income later.

While these options offer more control, they do not give John the certainty of lifetime income. There is a chance that he could run out of money.

John, with TIAA's help, can combine options into a plan that is tailored to his needs in retirement.

In addition to the income options we've just described, there are special rules for withdrawals from TIAA Traditional for certain plans.

A Transfer Payout Annuity allows John to access his TIAA Traditional Annuity savings over a certain number of years. However, since a Transfer Payout Annuity only provides income for a limited period of time, and because John may be giving up higher amounts of lifetime income if he contributed to TIAA Traditional throughout his career, he should speak with us before choosing this option to ensure it's right for him.

With the TIAA Interest-Only Option, John may receive payments that equal his interest earnings each month once he reaches age 55, if his plan allows it. He can then switch to another income option if his needs change, or to the Minimum Distribution Option once he reaches 70½.

Lastly, with our Minimum Distribution Option, we will calculate how much of John's plan assets he needs to receive to meet federal distribution requirements when he reaches age 70½, or retires, whichever is later. And if he doesn't need this money for income, we can help with other products that may fit his needs and preferences.

For nearly 100 years, TIAA has been committed to helping people like John and his family pursue a comfortable retirement We can help John navigate through these decisions and create a personalized income plan that is right for him — by providing choice, flexibility, and an income that cannot be outlived.

To learn more, please contact your dedicated TIAA consultant or call us at 800-842-2252.

A closer look

Our Retirement Annuities

Your employer savings plan may offer these annuities.
Contact your institution to see which of these products are available in your plan.
Annuity contracts and certificates are issued by Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF).

TIAA Traditional

Choose to convert a portion or all of your account value into income that is steady and stable. Additionally, income may grow over time through additional annual credited amounts based on the performance of TIAA General Account.

Your initial payment is based on a number of factors including, but not limited to, your age, the dollar amount applied, income option chosen and the interest rates at the time of your original investments.

The TIAA General Account is an insurance company account, does not present an investment return and is not available to investors.

Variable Annuities (including the CREF Accounts, TIAA Real Estate and TIAA Access Annuities)

Choose to convert a portion or all of your account value into income that offers growth potential and may vary based on performance of investment choices chosen by you and managed by TIAA Asset Management.

Your initial payment is based on a number of factors including, but not limited to, your age, the dollar amount applied, income option chosen and an assumed investment return allowing future investment returns to then be compared to this amount for calculating future payments.
Stay flexible

Tailor your plan to suit your needs

Annuity strategies are not one-size-fits-all. Discover the ways you can customize how you withdraw from annuities in a way that works best for you.
Next Steps

How TIAA can help

Lifetime income

Investigate income options that can help create lifetime income to help realize your retirement lifestyle.

Investment strategies

We can help you align your asset allocation strategy with your long-term income needs.

Don’t go it alone

We can help you create a retirement income strategy that factors in your concerns, as well as your goals.

Get in Touch

Talk with a TIAA Consultant to help you shape your overall retirement strategy and to help you consider the next steps.


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