IRA ANNUITY INVESTMENT OPTIONS
Why consider an annuity as part of your IRA.
A fixed annuity can add security, and a variable annuity can add growth potential. Including both in your IRA could help you benefit even more.
What is an annuity?
An annuity is a financial product that can turn a sum of money into an income stream. With a retirement annuity, you save money in the annuity during your working years and when you're ready to retire, you can convert your savings into a series of regular payouts. There are two types of retirement annuities: fixed and variable.
A fixed annuity offers predictability. During your working years, you contribute money to your annuity account, which earns interest at a set rate–your account balance is guaranteed to grow and you’ll never lose the money you’ve saved. When you retire, you can turn your annuity savings into payments that are guaranteed to last as long as you live.1
A variable annuity carries more risk but also offers more long-term growth potential. While you’re saving, professionals invest your money in the market, so your account balance varies based on the investments’ performance. When you retire, variable annuities can also provide an income stream that’s guaranteed to last for your lifetime, but the actual amount of each payment will vary based on how the annuity’s investments are doing.
The payouts offered by fixed and variable annuities are called ‘lifetime income.’ And lifetime income is the reason you should consider an annuity in your IRA.
A brief history of lifetime income
The most well-known type of lifetime income today is Social Security. In the past, many people retired with pensions, another type of lifetime income. When pensions started to become less common, workers needed a different way to ensure they had money for retirement. So in the 1970s, the federal government passed laws that led to IRAs and employer-sponsored retirement plans like a 403(b) and a 401(k).
These solutions are common today, but they aren’t a perfect replacement for pensions. With a pension, your employer was responsible for making sure you had money during retirement. Today, you’re responsible for your own retirement income. An IRA (or an employer-sponsored retirement account) can help you save and grow your money, but it doesn’t ensure you’ll have an income during retirement. So another solution is becoming popular, one that focuses on both growing money during your working years and ensuring you have money during retirement. Enter the IRA with the option to include an annuity.
With an annuity, you can create your own lifetime income.
By including a fixed annuity in your IRA and, at retirement, converting the balance into lifetime income, you can give yourself more retirement security. Your fixed annuity payments ensure that you’ll always have an income stream during retirement.
And when you include a variable annuity alongside a fixed annuity, you can help set yourself up for more success. Independent research firm Morningstar has determined that you can receive more income when you combine fixed and variable annuities in your retirement plan.2 This combination can also provide protection against other risks that can impact retirement savings and income, like outliving your savings.
TIAA offers several variable annuities that can complement
If you’re curious about including an annuity in your IRA, we can help. Our advisors can help you understand your options, including how an annuity can fit into your IRA.
*Issued by Teachers Insurance and Annuity Association of America (TIAA), New York, NY.
TIAA Traditional, our flagship fixed annuity, offers the potential for more retirement income.
When you allocate a portion of your IRA to TIAA Traditional, you’re laying the foundation for a retirement of guaranteed lifetime income with an exclusive TIAA Loyalty Bonus® the longer you contribute.
1893661 Why TIAA Traditional - New Transfers Video[music playing](Off-camera host)For more than 100 years TIAA Traditional has been helping people like you build a more secure future by providing guaranteed growth on your retirement savings throughout your working years.And when you're ready to retire, TIAA Traditional can provide guaranteed income for the rest of your life similar to Social Security.The difference is that you own your TIAA Traditional and you'll have choices for how you want your income to be paid.Your TIAA Traditional annuity is designed to be part of a long-term plan for retirement that includes a diverse mix of options, each with its own job to do.The job of TIAA Traditional is to protect a portion of your savings now so you can have income later that never runs out.Unlike investments tied to the ups and downs of the markets, TIAA Traditional provides a guaranteed rate of growth as you save so your balance will keep increasing no matter what.With a typical long-term plan, the amount you save in guaranteed assets like TIAA Traditional would gradually increase throughout your working years to help protect more of your savings as you get closer to retirement.When you're ready to retire, you can turn all or some of your TIAA Traditional balance into pension-like income that lasts for the rest of your life to help you cover everyday living expenses like housing, food and utilities.And perhaps best of all, because of our not-for-profit heritage, TIAA seeks to share our profits back with participants like you.This can mean additional growth beyond the guaranteed rate while you're saving as well as additional income in retirement.And the longer you've contributed to TIAA Traditional, the higher your income may be.While these amounts are not guaranteed, TIAA Traditional has paid customers more than the guaranteed minimum amount every year since 1949.We're glad you're part of the TIAA Traditional family and are here to help whenever you need us.[music ends]
All about annuities
Curious about annuities? We’ve created a
brand-new way to learn about lifetime income.
1 All guarantees are based on TIAA's claims-paying ability. TIAA Traditional is a guaranteed insurance contract and not an investment for federal securities law purposes. Past performance is no guarantee of future results.
2 Morningstar, “The Benefit of Diversified Income for Retirees: Combining Fixed and Variable Annuities,” November 2019.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.
Annuity contracts may contain terms for keeping them in force. We can provide you with costs and complete details.
TIAA Traditional is a fixed an annuity issued by Teachers Insurance and Annuity Association of America (TIAA), 730 Third Avenue, New York, NY, 10017: Form series including but not limited to: 1000.24; G-1000.4; IGRS-01-84-ACC; IGRSP-01-84-ACC; 6008.8. Not all contracts are available in all states or currently issued.
Converting some or all of your savings to income benefits (referred to as "annuitization") is a permanent decision. Once income benefit payments have begun, you are unable to change to another option.
Lifetime income payments from TIAA Traditional may include a TIAA Loyalty Bonus® which is discretionary and determined annually.
Annuities are designed for retirement and other long-term goals. They offer several payment options, including lifetime income. Guarantees are based on the claims-paying ability of the issuer. However, payments from CREF and TIAA variable annuities are not guaranteed and the payment amounts will rise or fall depending on investment returns. If you choose to invest in the variable investment products, your money will also be subject to the risks associated with investing in securities, including loss of principal.
The real estate industry is subject to various risks including fluctuations in underlying property values, expenses and income, and potential environmental liabilities.
In general, the value of the TIAA Real Estate Account will fluctuate based on the underlying value of the direct real estate, real estate-related investments, real estate-related securities and liquid, fixed income investments in which it invests. The risks associated with investing in the Real Estate Account include the risks associated with real estate ownership including, among other things, fluctuations in underlying property values, higher expenses or lower income than expected, risks associated with borrowing and potential environmental problems and liability, as well as risks associated with participant flows and conflicts of interest. For a more complete discussion of these and other risks, please consult the prospectus.
Advisory services are provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser.