TIAA Question

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spdoublebass
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TIAA Question

Post by spdoublebass »

I’ve read the threads on TIAA. I understand RA vs GRSA.

I have one specific question.

When people have a GRSA Account, they often say you can Annuitize later. So for example someone could put money into the Equity index, then before retirement shift that money over to Traditional and annuitize it.

My question is this: would it have been better to have had that money in Traditional all along?

I’m thinking the answer is that you don’t really know. By having it in equities, it has the possibility to grow more than at the fixed rate of Traditional.

However, if you put the money directly in Traditional from the get go, that money would be in a tier different from what you would get if you exchanged it right before retirement.

Thanks for any help.

This came up because I’m adjunct at several universities (5 total). I want to get the employee contribution. Some schools have great funds and other don’t. So I was contemplating what my options are.
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samsoes
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Re: TIAA Question

Post by samsoes »

The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
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Re: TIAA Question

Post by spdoublebass »

samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.

So you’re saying in the RA accounts, where the TRAD is non liquid, the money that goes in there stays there. However in the RA accounts if you choose stock, you still have flexibility.

What if you take that stock and move it to TRAD right before retirement? Would the rates be better if they were in TRAD the whole time?

So taking money out of an RA account is only restricted if you put money into TRAD?
In the other threads I’ve read this seems to be the case. Maybe I’m wrong though.
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Re: TIAA Question

Post by samsoes »

spdoublebass wrote: Mon Aug 03, 2020 10:57 am
samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.

So you’re saying in the RA accounts, where the TRAD is non liquid, the money that goes in there stays there. However in the RA accounts if you choose stock, you still have flexibility.

What if you take that stock and move it to TRAD right before retirement? Would the rates be better if they were in TRAD the whole time?

So taking money out of an RA account is only restricted if you put money into TRAD?
In the other threads I’ve read this seems to be the case. Maybe I’m wrong though.
Yes, there is flexibility in their stock funds.

Once it's in TRAD, the only way it can be withdrawn is equally over a 10 year period.

Check with TIAA to confirm this. They can look-up your specific TRAD contract(s).
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Re: TIAA Question

Post by bikechuck »

samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
You can also take "interest only" distributions which I intend to in January until I need to begin RMDs.
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Re: TIAA Question

Post by Northster »

bikechuck wrote: Mon Aug 03, 2020 11:35 am
samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
You can also take "interest only" distributions which I intend to in January until I need to begin RMDs.

yes, works for me and I think gives me best overall value in terms of money received/remaining
CFM300
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Re: TIAA Question

Post by CFM300 »

I'm far from an expert on TIAA, but I'll take a shot at this.

TIAA does claim that when annuitizing Traditional one's payout will be higher the longer the funds have been in Traditional. In other words, your payout will be higher when annuitizing $100,000 worth of Traditional that has accumulated over 20 years, than when annuitizing $100,000 just moved into Traditional. But I've never seen an explanation of how much higher the payout will be, nor a way to calculate it, nor even whether that's a guaranteed feature of the product. So I think your question is unanswerable, except to say that if some other investment (like stocks) were to outperform Traditional during accumulation by more than the amount needed to equalize the payout of the last-minute move to Traditional, then you'd be better off investing in that.

My wife invests in Traditional and considers it part of her bond allocation. In that regard, some have analyzed that Traditional does about as well as Total Bond. When the time comes, she'll make a decision about annuitizing. Basically, she's just hedging her bets and trying to minimize future regret.

Here are two articles that you might find helpful. Also, search on the TIAA forum on Morningstar.

https://collegeretirement.blogspot.com/ ... -deal.html

https://www.tiaainstitute.org/publicati ... retirement

Also, TIAA offers annuities other than Traditional, including CREF Stock and TIAA Real Estate, both of which are variable annuities. I'm not sure whether TIAA/CREF claims that investing in those for a longer period of time increases the payout upon annuitization the way it does with Traditional.
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Re: TIAA Question

Post by CFM300 »

Also, there are more varieties of Traditional than have been mentioned in this thread: RA, GRA, RC, SRA, GSRA, RCP. This may be relevant because you mentioned working for five different universities. You'll need to pay attention to the which version of Traditional is being offered, since they have different crediting rates and withdrawal options. See here:

https://www.tiaa.org/public/pdf/underst ... choice.pdf
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Re: TIAA Question

Post by adamthesmythe »

CFM300 wrote: Mon Aug 03, 2020 11:43 am TIAA does claim that when annuitizing Traditional one's payout will be higher the longer the funds have been in Traditional.
I have always considered Traditional like a bond fund, although a bond fund with some unusual characteristics (the "vintage" thing, and the guaranteed yield plus "extra.") So I consider the choice of how much to put in Traditional vs. stock funds as the usual stock/bond allocation question. As I always planned to annuitize some assets I do not regard the limits on withdrawal as a problem.

TIAA Traditional may be a rare case of a situation where the inscrutability of the investment is not a bad sign.
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Re: TIAA Question

Post by ResearchMed »

samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
It depends upon which plan the Employer has. For some (including currently), there is both the better known illiquid version and also a *fully* liquid version, where EmployEE contributions can go.

AFAIK, it gets the same return during the accumulating stage, and also after being annualized IF one does that (which one might not, given the nice liquidity).

We now have access to both Employer-contributed and Employee-contributed Trad Ann, where the latter is of that fully liquid version. It's not much different than a money market fund, other than currently having a much larger return. (Currently both are at "guaranteed" minimum of 3%, given the low interest rate environment.)

OP should check whether they have access to a liquid version within their plan.

RM
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Re: TIAA Question

Post by oldzey »

spdoublebass wrote: Mon Aug 03, 2020 10:43 am I’ve read the threads on TIAA. I understand RA vs GRSA.

I have one specific question.

When people have a GRSA Account, they often say you can Annuitize later. So for example someone could put money into the Equity index, then before retirement shift that money over to Traditional and annuitize it.

My question is this: would it have been better to have had that money in Traditional all along?

I’m thinking the answer is that you don’t really know. By having it in equities, it has the possibility to grow more than at the fixed rate of Traditional.

However, if you put the money directly in Traditional from the get go, that money would be in a tier different from what you would get if you exchanged it right before retirement.

Thanks for any help.

This came up because I’m adjunct at several universities (5 total). I want to get the employee contribution. Some schools have great funds and other don’t. So I was contemplating what my options are.
Here is a link to the accumulation and payout rates for the TIAA Traditional Group Supplemental Retirement Annuity (GSRA):
https://www.tiaa.org/public/investment- ... r=47933633

You can see that the time period (often referred to as "vintages") has an effect on the accumulation and payout rates.

If you're interested, I've provided a link below to several publications about TIAA Traditional that I have collected over the years. Note that some of these items may be outdated:
https://www.dropbox.com/sh/y08d3qbmvisa ... QrZIa?dl=0

Hope this information is useful to you in learning more about TIAA Traditional.
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Re: TIAA Question

Post by tibbitts »

The black-box part of this to me is the infamous "longevity" credit for having money invested in TIAA longer. I haven't researched it so I don't understand it or know how it works, but it's not related in any way to vintages as far as I know. Well really all of TIAA is a black box, but all the discussions of 10-year withdrawals and anything else related to the OP's plan really need to be tempered by the need to read the plan documents that apply to the OP.

I'm not sure there's any point in wondering if it would have been better to have been in Traditional all along - obviously it depends on what other investments had been selected and when.
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Re: TIAA Question

Post by oldzey »

P.S. OP, you might also check out the TIAA forum over at M*:
https://community.morningstar.com/t5/TI ... /bd-p/TIAA
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Re: TIAA Question

Post by spdoublebass »

Northster wrote: Mon Aug 03, 2020 11:39 am
bikechuck wrote: Mon Aug 03, 2020 11:35 am
samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
You can also take "interest only" distributions which I intend to in January until I need to begin RMDs.

yes, works for me and I think gives me best overall value in terms of money received/remaining
Do you guys mean that when you stop working (I'm 37, so I will be working for a while), you can keep the money in Traditional, but take the interest as a payment?
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Re: TIAA Question

Post by spdoublebass »

CFM300 wrote: Mon Aug 03, 2020 11:43 am

https://collegeretirement.blogspot.com/ ... -deal.html

https://www.tiaainstitute.org/publicati ... retirement

Also, TIAA offers annuities other than Traditional, including CREF Stock and TIAA Real Estate, both of which are variable annuities. I'm not sure whether TIAA/CREF claims that investing in those for a longer period of time increases the payout upon annuitization the way it does with Traditional.
Thanks for the links.
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Re: TIAA Question

Post by spdoublebass »

CFM300 wrote: Mon Aug 03, 2020 11:53 am Also, there are more varieties of Traditional than have been mentioned in this thread: RA, GRA, RC, SRA, GSRA, RCP. This may be relevant because you mentioned working for five different universities. You'll need to pay attention to the which version of Traditional is being offered, since they have different crediting rates and withdrawal options. See here:

https://www.tiaa.org/public/pdf/underst ... choice.pdf
Thanks.

I am aware of the different types. I say aware, but of course I find it confusing. Ha!

I mainly am addressing the RA type. That is what I was confused about. It is weird that the RA account functions like the others, except when you are dealing with Traditional. That's why I was trying to make a decision about what to do with those accounts.

For one of my schools, the ER's are terrible. So I was just going to not contribute from my salary and only do what I need to to get the company match. Then I was going to select Traditional to avoid the expense ratio. That's what set me down this path to this question.

I should also say, I'm not too worried about making a decision, I'm not dealing with a lot of money here. BUT, I still wanted to know what I'm getting into with RA Trad.
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Re: TIAA Question

Post by spdoublebass »

oldzey wrote: Mon Aug 03, 2020 12:07 pm
spdoublebass wrote: Mon Aug 03, 2020 10:43 am I’ve read the threads on TIAA. I understand RA vs GRSA.

I have one specific question.

When people have a GRSA Account, they often say you can Annuitize later. So for example someone could put money into the Equity index, then before retirement shift that money over to Traditional and annuitize it.

My question is this: would it have been better to have had that money in Traditional all along?

I’m thinking the answer is that you don’t really know. By having it in equities, it has the possibility to grow more than at the fixed rate of Traditional.

However, if you put the money directly in Traditional from the get go, that money would be in a tier different from what you would get if you exchanged it right before retirement.

Thanks for any help.

This came up because I’m adjunct at several universities (5 total). I want to get the employee contribution. Some schools have great funds and other don’t. So I was contemplating what my options are.
Here is a link to the accumulation and payout rates for the TIAA Traditional Group Supplemental Retirement Annuity (GSRA):
https://www.tiaa.org/public/investment- ... r=47933633

You can see that the time period (often referred to as "vintages") has an effect on the accumulation and payout rates.

If you're interested, I've provided a link below to several publications about TIAA Traditional that I have collected over the years. Note that some of these items may be outdated:
https://www.dropbox.com/sh/y08d3qbmvisa ... QrZIa?dl=0

Hope this information is useful to you in learning more about TIAA Traditional.

Wow thank you!

I'm thinking that it might be beneficial to probably contribute to Traditional Along the way in the accumulation phase. I know it might not make that much difference, but It would be nice to have some higher earning money upon retirement.
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Re: TIAA Question

Post by bikechuck »

spdoublebass wrote: Mon Aug 03, 2020 1:56 pm
Northster wrote: Mon Aug 03, 2020 11:39 am
bikechuck wrote: Mon Aug 03, 2020 11:35 am
samsoes wrote: Mon Aug 03, 2020 10:51 am The issue with TIAA Traditional annuity is that it's illiquid. No lump-sum withdraws are allowed, not even in retirement. While they do provide liquidity to meed RMD requirements, the only other way one can withdraw is evenly over a ten year period. In the event a large amount for an emergency extraordinary expense is needed, you're out of luck.

That has been my experience researching the availability of funds for a retired relative with a large TIAA Traditional Annuity balance.

Their stock funds, on the other hand, are liquid and can be sold and withdrawn at any time.
You can also take "interest only" distributions which I intend to in January until I need to begin RMDs.

yes, works for me and I think gives me best overall value in terms of money received/remaining
Do you guys mean that when you stop working (I'm 37, so I will be working for a while), you can keep the money in Traditional, but take the interest as a payment?
Yes, I retired three years ago and I have been letting my TIAA TRADITIONAL continue its relentless growth while I lived off the sale of some stock from a former employer. I sold the last of that this year and I intend to start taking interest only payments on my SRA and RA beginning in January. I will begin drawing RMD amounts when I reach the age of 72. At some point in my mid to late 70s I will decide if I want annuitize any of my balances.
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Re: TIAA Question

Post by crefwatch »

spdoublebass wrote: Mon Aug 03, 2020 2:03 pm I am aware of the different types. I say aware, but of course I find it confusing. Ha!

I mainly am addressing the RA type. That is what I was confused about. It is weird that the RA account functions like the others, except when you are dealing with Traditional. That's why I was trying to make a decision about what to do with those accounts.

For one of my schools, the ER's are terrible. So I was just going to not contribute from my salary and only do what I need to to get the company match. Then I was going to select Traditional to avoid the expense ratio. That's what set me down this path to this question.
It may help a little to know that in more ordinary interest rate times ... ... there was a vivid payoff for putting money into a less-liquid TIAA Traditional option. The less-liquid accounts used to, routinely, pay a (varying) bonus of 0.5% to 1.0% higher annual interest rate than the liquid options. That is not true at the moment, but in the 100-year history of TIAA Traditional, it's fair to call that situation "unusual". Since prevailing rates have been below the guaranteed minimums, it's not an unreasonable outcome, either.

If and when the economy starts to recover, and interest rates finally rise, products like TIAA Traditional, that do not decline in principal value as interest rates rise, are going to get more attention, and be more attractive despite being hard to understand. Every bond mutual fund will have a decline in NAV as interest rates rise. Investors will be searching for Fixed Income options that have zero interest-rate risk.

"select Traditional to avoid the expense ratio" I have huge amounts of money in TIAA Traditional. But it is wrong to imagine that there are no expenses in operating the account, or that you don't pay for them. It is an insurance product that is not regulated by the SEC. So mutual fund reporting rules do not apply to it. In states where some schools have managed to force TIAA to provide some sort of expense figure (maybe because of teacher contracts or state law, I don't know the reasons ... ) the estimated figure has been over 0.5%, a high figure for Bogleheads. This does not keep me away from the product. Long ago, TIAA Traditional had visible Premium Charges, but they were eliminated.

In some management discussions, the TIAA Traditional interest crediting rate has been stated to have a relation to the 10-year Treasury Bill rate. But the level and timing of TIAA Traditional rates is entirely under the (opaque) control of the company. It is not a fractional ownership product like a mutual fund. It's an insurance contract, where TIAA promises to do certain things if you give them your money.

In 1974, I began investing even though, at that time, there was NO 10-year payout option, no IPRO, no RMD. The only option was a lifetime annuity in retirement.) I continue to have large amounts of money in TIAA Tradtional. It's my largest Fixed-Income allocation, even though it's only in my Qualified accounts.

An old number doesn't reflect much on a current investment decision, but I'm transcribing an old interest rate report below. The relevance is in thinking about a multi-decade, lifelong investment decision. (I emphasize the time span because the allegedly fearsome "lockup" of the RA account has never bothered me in the least. I believe that retirement investments can have different rules than other parts of a personal nest egg.)

I chose this 1985 rate sheet because it's an EXCEPTION to the rule! This was a period of increasing interest rates, and with very high absolute levels. Uncharacteristically, the oldest money in TIAA Traditional was getting a lower rate at that time. That has only rarely been the case. The document uses a cumbersome verbal presentation that I have converted to a Table Format.

TIAA Annuity Dividends Increased for 1985 [Document 4182-2-85)

For the twelve months March 1, 1985 through February 28, 1986, your TIAA annuity will be credited with the folowing total effective annual rates of interest [RA is implied - crefwatch]

Premiums and additional amounts on and after 1/1/1985: 11.75%
1/1/82-12/31/84: 12%
1/1/79-12/31/81: 10.50%
Prior to 1979: 9.50%
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Re: TIAA Question

Post by spdoublebass »

crefwatch wrote: Tue Aug 04, 2020 9:11 am

It may help a little to know that in more ordinary interest rate times ... ... there was a vivid payoff for putting money into a less-liquid TIAA Traditional option. The less-liquid accounts used to, routinely, pay a (varying) bonus of 0.5% to 1.0% higher annual interest rate than the liquid options. That is not true at the moment, but in the 100-year history of TIAA Traditional, it's fair to call that situation "unusual". Since prevailing rates have been below the guaranteed minimums, it's not an unreasonable outcome, either.

Thanks for your reply.

If and when the economy starts to recover, and interest rates finally rise, products like TIAA Traditional, that do not decline in principal value as interest rates rise, are going to get more attention, and be more attractive despite being hard to understand. Every bond mutual fund will have a decline in NAV as interest rates rise. Investors will be searching for Fixed Income options that have zero interest-rate risk.
This is a great point. I am not connecting the dots though to how investors searching for FI that has zero interest rate risk would affect my situation. Are you just pointing out that Tradition is a great product for a rising rate environment?

"select Traditional to avoid the expense ratio" I have huge amounts of money in TIAA Traditional. But it is wrong to imagine that there are no expenses in operating the account, or that you don't pay for them. It is an insurance product that is not regulated by the SEC. So mutual fund reporting rules do not apply to it. In states where some schools have managed to force TIAA to provide some sort of expense figure (maybe because of teacher contracts or state law, I don't know the reasons ... ) the estimated figure has been over 0.5%, a high figure for Bogleheads. This does not keep me away from the product. Long ago, TIAA Traditional had visible Premium Charges, but they were eliminated.

Yeah, you are right. Everything has an ER. I shouldn't be naive and think Traditional doesn't have one. I was just concerned because I want to open an account at a new school to get the employer match, but wasn't too excited about the choices besides Traditional.

In some management discussions, the TIAA Traditional interest crediting rate has been stated to have a relation to the 10-year Treasury Bill rate. But the level and timing of TIAA Traditional rates is entirely under the (opaque) control of the company. It is not a fractional ownership product like a mutual fund. It's an insurance contract, where TIAA promises to do certain things if you give them your money.

In 1974, I began investing even though, at that time, there was NO 10-year payout option, no IPRO, no RMD. The only option was a lifetime annuity in retirement.) I continue to have large amounts of money in TIAA Tradtional. It's my largest Fixed-Income allocation, even though it's only in my Qualified accounts.

An old number doesn't reflect much on a current investment decision, but I'm transcribing an old interest rate report below. The relevance is in thinking about a multi-decade, lifelong investment decision. (I emphasize the time span because the allegedly fearsome "lockup" of the RA account has never bothered me in the least. I believe that retirement investments can have different rules than other parts of a personal nest egg.)

I chose this 1985 rate sheet because it's an EXCEPTION to the rule! This was a period of increasing interest rates, and with very high absolute levels. Uncharacteristically, the oldest money in TIAA Traditional was getting a lower rate at that time. That has only rarely been the case. The document uses a cumbersome verbal presentation that I have converted to a Table Format.

TIAA Annuity Dividends Increased for 1985 [Document 4182-2-85)

For the twelve months March 1, 1985 through February 28, 1986, your TIAA annuity will be credited with the folowing total effective annual rates of interest [RA is implied - crefwatch]

Premiums and additional amounts on and after 1/1/1985: 11.75%
1/1/82-12/31/84: 12%
1/1/79-12/31/81: 10.50%
Prior to 1979: 9.50%
This is great info. So in your case, older money was paying less than new money you were putting in because of rising rates. I glad you pointed this out. I was wondering if older moneys always would receive a "better" rate, but I guess there is no time bonus for being in earlier.

I do have a few questions still on RA account only.
-If I have money in equities I can choose to annuitize them. I can pick a Variable Annuity, OR I could transfer that money to Traditional and get in the 10 year pay out or life time payout.
-If instead of equities I put money into Traditional, I could take the 10 year payout or the lifetime payout.

So basically what I'm asking is the only difference between selecting an equity fund over traditional is that I get exposer to Stock (which may or may not grow more than Trad) until retirement. At which time I could select a VA, or exchange the stock for Trad, getting me the current Trad rates at that time (whatever they will be).

Is that right?
People make such a big deal about the RA accounts, but I don't this that is such a bad deal.
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Re: TIAA Question

Post by crefwatch »

spdoublebass wrote: Tue Aug 04, 2020 1:21 pm I do have a few questions still on RA account only.
-If I have money in equities I can choose to annuitize them. I can pick a Variable Annuity, OR I could transfer that money to Traditional and get in the 10 year pay out or life time payout.
-If instead of equities I put money into Traditional, I could take the 10 year payout or the lifetime payout.

So basically what I'm asking is the only difference between selecting an equity fund over traditional is that I get exposer to Stock (which may or may not grow more than Trad) until retirement. At which time I could select a VA, or exchange the stock for Trad, getting me the current Trad rates at that time (whatever they will be).
It only applies during the accumulation period, but I should remind you that there are (alas) three classes of CREF Variable Annuities. The ER depends on the AUM of the EMPLOYER. While I love CREF Stock VA, it is impossible to recommend in the R1 class, if still easy to recommend in the R3 class. (This does not apply to you, but I no longer advocate TIAA or CREF for new employees who have a choice. The company is not as customer-centric as it once was.)

You don't mention if you understand the import of making a decision to annuitize in TIAA Traditional or in a CREF Account. I'm referring to the difference between an annuity which is (if not, precisely) FIXED, and an annuity that is market linked - both up and down. CREF notes that an affirmative decision to annuitize in a CREF account is not genuinely "time-sensitive". That is because the same gains that you would make in the un-annuitized account would also be made in the annuitized (CREF) account.

I don't like it when people talk about the 10-year payout option and the lifetime option in the same sentence. Some retirees have no way to (just to pick a good example ... ) delay Social Security to age 70 UNLESS they live on (i.e. SPEND DOWN AND HAVE NO MORE) their TIAA accumulation. I suppose those are people who have no other money. After all, the normal advice is to spend after-tax savings first, and Qualified accounts later. But I digress.

In fact, there are (today, a big change from pre-1989) some options to change annuitization decisions after annuitizing. They are complex, and should be read about in CURRENT TIAA documents. (I value greatly those older pamphlets posted by other customers, but you can't base every modern decision on a 2010 pamphlet!) It is worth checking with your HR department to see if your employer's TIAA contract has any special provision for employees within the first 8 months (or some other time span) of their retirement or separation from service. In SRAs (you don't have one) there are sometimes options for cashing out TIAA Traditional for a fee, but with no nine-year delay.

Instead of answering you directly about the big choice you mention, I'm going to paste below about my mother's experience. She retired in 1990, so as always, "past performance is no guarantee of future results!" I might also add that you cannot compare two people annuitizing the SAME total of TIAA Traditional at the the same time in any given year, because their VINTAGE structure will produce different annutizations.

Edit: I cannot say for certain this is correct, but I strongly believe that her CREF Stock allocation of 71% at retirement was probably the result of the extremely common 50%/50% allocation to all her periodic premiums during her working years, and NO exchanges between the only two options that were available to her. I believe she did not have salary-reduction as an option, so a small part of her payouts are not taxable.

If this table does not show well, I will delete it and think of something else to post.

Code: Select all

		T I A A   T R A D I T I O N A L			C R E F   S T O C K   A C C O U N T		
		Annuitized:	$60,000	(29% of total)	Annuitized:	$150,000	(71% of total)
								
Year	Payout:	Payout:	MONTHLY	CUMULATIVE		MONTHLY	CUMULATIVE,	Cum. Pct of
	Fix'd	Divs	PAYMENT	(End of Yr.)		PAYMENT	(End of Yr.)	Ann. Incm.
1990	251	332	$583	$6,996			$866	$10,392		60%
1991	251	325	$576	$13,908			$886	$21,024		60%
1992	251	314	$565	$20,688			$940	$32,304		61%
1993	251	282	$533	$27,084			$1,029	$44,652		62%
1994	251	275	$526	$33,396			$1,045	$57,192		63%
1995	251	275	$526	$39,708			$1,104	$70,440		64%
1996	251	275	$526	$46,020			$1,104	$83,688		65%
1997	251	275	$526	$52,332			$1,377	$100,212	66%
1998	251	276	$527	$58,656			$2,093	$125,328	68%
1999	251	276	$527	$64,980			$2,237	$152,172	70%
2000	251	276	$527	$71,304			$2,683	$184,368	72%
2001	251	280	$531	$77,676			$1,964	$207,936	73%
2002	251	284	$535	$84,096			$1,866	$230,328	73%
2003	251	285	$536	$90,528			$1,327	$246,252	73%
2004	251	285	$536	$96,960			$1,826	$268,164	73%
2005	251	285	$536	$103,392		$1,898	$290,940	74%
2006	251	285	$536	$109,824		$2,131	$316,512	74%
2007	251	285	$536	$116,256		$2,319	$344,340	75%
2008	251	290	$541	$122,748		$2,131	$369,912	75%
2009	251	290	$541	$129,240		$1,184	$384,120	75%
2010	251	290	$541	$135,732		$1,812	$405,864	75%
2011	251	290	$541	$142,224		$2,035	$430,284	75%
2012	251	290	$541	$148,716		$2,029	$454,632	75%
2013	251	301	$552	$155,340		$2,238	$481,488	76%
2014	251	313	$564	$162,108		$2,666	$513,480	76%
2015	251	318	$569	$168,936		$2,852	$547,704	76%
2016	251	324	$575	$175,833		$2,654	$579,552	77%
2017	251	324	$575	$182,730		$3,018	$615,771	77%
2018	251	330	$581	$189,697		$3,401	$656,580	78%
2019	251	330	$581	$196,664		$3,382	$697,160	78%
2020	251	336	$586	$203,701		$2,915	$732,136	78%  
Image
Last edited by crefwatch on Mon Aug 17, 2020 12:49 pm, edited 1 time in total.
crefwatch
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Re: TIAA Question

Post by crefwatch »

Although it has a number of off-topic posts, you might want to wade through this recent discussion about whether to delay annuitizing TIAA Traditional, over at Morningstar TIAA-CREF:

https://community.morningstar.com/t5/TI ... 4756#M7717
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spdoublebass
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Re: TIAA Question

Post by spdoublebass »

I just wanted to say thanks again for all the replies in this thread.

I looked through everything and even called TIAA just to confirm a few things.

I had to laugh because the woman who took my call was very nice but said "why are you worried about this stuff now at 37?" She meant it in a good way, but I still found it funny.

The only GRA account's my wife and I have are a relatively small part of our portfolio. It is where 3% of our salary goes to get and 8% match from our University. This totals 11% contribution of our salaries. However, both being adjunct faculty, it's not a large amount of money. I did decide to put this money into the Traditional fund (non liquid variety).

The other money I withhold from our paychecks going into the GRSA accounts, I will put in stocks and possibly Traditional (liquid) to hit a certain percentage overall of Traditional in my AA.

I wanted to add some fixed income to our portfolio and have been trying to decide how to do so. This seems like a very simple solution.

Thanks again for all the replies.
I'm trying to think, but nothing happens
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