When we make money, our customers are top of mind. Our track record has been one of always putting the customer first, sharing profits with participants for the past 70 years.1
Take a look at our 3 hypothetical scenarios to learn how TIAA2 shares profits with our TIAA Traditional participants:
* Troy contributed $10,000 on 10/01/2007, and we guaranteed a set interest rate of 3% so he'd receive a future value of $13,439. After 10 years, on 9/30/2017, his initial contribution not only reached the guaranteed3 future value but also exceeded it by reaching $15,364, thanks to almost $2,000 in shared profits, which was the result of an average interest rate of 4.39%.
Andrea contributed $10,000 on 10/01/1987, and we guaranteed a set interest rate of 3% so she'd receive a future value of $18,061. After 20 years, on 9/30/2017, her initial contribution not only reached the guaranteed3 future value but also exceeded it by reaching $29,153, thanks to more than $11,000 in shared profits, which was the result of an average interest rate of 6.33%.
** Brenda started contributing to TIAA Traditional at age 35. She contributed $100 a month for 30 years— $36,000 in total contributions — and retired at 65 with $148,900 in her TIAA Traditional account on December 31, 1993.2
On January 1, 1994, Brenda converted $100,000 of this accumulation and used it to purchase a TIAA Traditional Single Life Annuity with a 10-year guarantee.
Her initial TIAA Traditional Single Life Annuity income guarantee was $471.43 a month. That totals $135,772 over 24 years. BUT, she actually received $256,659—a total of $120,000 of income above the guaranteed amount.
So how did Brenda earn so much over her single life annuity guaranteed monthly income?
The short answer is: longevity. Brenda has been contributing with us for 30 years. During this time, her TIAA Traditional account earned interest and benefited when additional amounts were declared by the TIAA Board at its discretion. Unlike most insurance companies, and consistent with our nonprofit heritage, we have shared profits—in the form of additional amounts—and Brenda benefited accordingly.