Covering expenses with income you can’t outlive.
To have lifetime income means you can count on it to provide a stream of payments to you for the rest of your life, no matter how long you live. Combined with other sources of lifetime income that can potentially grow, lifetime income from annuities can be an important component of your overall income plan.
Annuities are designed for retirement and other long term goals. Withdrawals are taxed as ordinary income and, if taken prior to age 59-1/2, you may be subject to an additional 10% early withdrawal penalty. If you choose to invest in the variable investment products, your money will be subject to the risks inherent in investing in securities, including the loss of principal.
Annuities can offer choice and control for how you receive income in retirement. Depending on the type of annuity, issuer or product, income choices can be fixed or variable, or both. You can decide if you want a consistent income stream (fixed) for life or if you are comfortable with letting it rise or fall depending on the performance of the underlying investments. Fixed annuity guarantees are based on the claims paying ability of the issuer. Payments from variable annuity accounts are not guaranteed and will fluctuate based on investment performance.
Qualified Vs. Non-Qualified annuities.
You may have the ability to invest in annuities within your employer retirement plan or IRA (qualified) as well as in individually owned annuities using dollars that have already been taxed (non-qualified). Examples of after-tax money include your net pay from employment and distributions from a retirement account that you have paid taxes on. The distinction of creating income from an after-tax annuity is that you pay income tax only on any earnings you realize above your contributions and after distributions are taken. Please note that annuities do not provide any tax-deferral advantage over other types of investments within a qualified plan.
Annuitizing over time.
You don't have to annuitize everything all at once. You can convert portions of your assets to lifetime income over time to meet your changing needs and to supplement withdrawals taken from your other investment accounts in retirement.
If you have an existing annuity, and are thinking of transferring new assets to it or replacing it with another annuity, you should carefully consider the benefits of both the existing and new product. There will likely be differences between them. There may also be tax consequences associated with the transfer of assets. Consult with your own advisors regarding your particular situation.
Interested in learning more?
If you already have annuities (e.g. TIAA Traditional, TIAA Real Estate or CREF variable annuities) you can turn some of your assets into lifetime income. Learn more about Lifetime Income with Annuities.
If you want a quick calculation of how much income you can get from an annuity, use the Lifetime Income Calculator.
TIAA Plan participants can also log in to use the Retirement Income Planner.View Sample Profiles
Annuity contracts contain exclusions, limitations, reductions of benefits and may contain terms for keeping them in force. We can provide you with costs and complete details.