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Follower ○○

TIAA Traditional IRA Annuirizing

I was on the TIAA Traditional page and noticed it has a monthly payout of 5.7%.  As a federal employee, I can open a TIAA IRA. The TIAA traditional rate of 1% during accumulation makes no sense to invest in, but if I were to rollover an IRA at retirement, and the monthly payout rate was higher than other opportunities, would that be a possibility? Is the "monthly payout" concept similar to any other SPIA ?

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Frequent Contributor

Re: TIAA Traditional IRA Annuirizing

Check monthly Traditional Rate thread. Payouts from Traditional-IRA are different [as there are no vintages] from those for Traditional-RA/SRA. Also, in theory, payouts can vary some due to min + bonus structure vs commercial SPIA.

YBB
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Follower ○○

Re: TIAA Traditional IRA Annuirizing

Thanks. And there's obviously no mortality credits, since the TIAA Trad payouts don't seem to based on one's age.

 

 

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Frequent Contributor

Re: TIAA Traditional IRA Annuirizing

Payouts shown are for age 65. You have to get quote from TIAA for your age and Annuity options.

https://community.morningstar.com/t5/TIAA-Funds/TIAA-Traditional-Rates-June-1-2020/m-p/702756#M6812

YBB
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Follower ○○

Re: TIAA Traditional IRA Annuirizing

Oh...duh. That make a lot more sense. 

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Participant ○

Re: TIAA Traditional IRA Annuirizing


@TJ wrote:

Thanks. And there's obviously no mortality credits, since the TIAA Trad payouts don't seem to based on one's age.


TJ, you need to read up on the TIAA Traditional product. It is unusual and hard to understand. You can start here. Look at all the links at the bottom of the page, as well as the page itself. Download and save any PDFs, because TIAA frequently updates their website in annoying ways.:

https://www.tiaa.org/public/learn/retirement-planning-and-beyond/how-do-traditional-annuities-work

An example of hard-to-understand is that while there are no mortality credits, age does affect the payout, in the sense of normal annuity formulas. But also, during the accumulation period (which you are proposing to be zero, so this does not apply to you ... ) returned reserves can increase the payout of long-term Participants.

I have no personal experience (because I don't expect to annuitize), but many posters in the past have said that their TIAA Trad estimates were better than open-market SPIA quotes. When you read about the product, you will learn about guaranteed amounts and additional amounts. This makes some Participants nervous. It doesn't bother me, but I've been a Participant since 1975.

I only mean to assist your research. I'm not urging one course or another for you personally.

Tim

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Frequent Contributor

Re: TIAA Traditional IRA Annuirizing

TJ,

Try this TIAA annuity calculator.

https://shared.tiaa.org/public/publictools/targetincome/annuityEstimator

Run your numbers.

Then go to this commercial annuity website for appropriate comparisons. 

 
Bob
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Frequent Contributor

Re: TIAA Traditional IRA Annuirizing

TIAA annuity comparisons may be better than commercial SPIA because of TIAA vintages for Traditonal-RC/RA/RCP/SRA - it seems that the same schedules are used for them.

But annuity from Traditional-IRA doesn't use vintages and uses only the rate for current vintage for payouts. It may or may not be favorable than commercial SPIA.

Note that TIAA has stopped disclosing the internal interest rate used for payouts.

YBB
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Frequent Contributor

Re: TIAA Traditional IRA Annuirizing

Yogi,

I ran some pretend numbers on both calculators--using non-employee Traditional. 

The commercial annuity was superior at my age.

As you and I believe Tim pointed out, I don't think TJ will gain any benefit from annuitizing a non-employee Traditional IRA. But I don't know TJ's age and I think it might be instructive for him to run a comparison.

Bob 

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Re: TIAA Traditional IRA Annuirizing

I'm 35. So it would be very premature to do any sort of in depth analysis , I was just curious.  I opened an IRA and was going to transfer a portion from Vanguard into TREA, but something happened with paperwork and it didn't happen.


Traditional doesn't seem like a smart investment when the accumulation rate is only 1%, but could make sense if I desire to annuitize later in life.

 

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Contributor ○○○

Re: TIAA Traditional IRA Annuirizing


@TJ wrote:

I'm 35. So it would be very premature to do any sort of in depth analysis , I was just curious.  I opened an IRA and was going to transfer a portion from Vanguard into TREA, but something happened with paperwork and it didn't happen.


Traditional doesn't seem like a smart investment when the accumulation rate is only 1%, but could make sense if I desire to annuitize later in life.


That does not seem to be a smart move to go from Vanguard to TIAA.

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Follower ○○

Re: TIAA Traditional IRA Annuirizing

@ECEPROF  at this point, I would only move a small % of my portfolio to TIAA to invest in the Real Estate Account to diversify. I planned on doing it last year, but TIAA wasn't able to send electronic signed forms evidently so Vanguard did nothing with the paperwork. I'm okay with it. I just wanted to open a position with TREA because it's not available to the public and its different from REIT's....

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Re: TIAA Traditional IRA Annuirizing


@TJ wrote:

@ECEPROF  at this point, I would only move a small % of my portfolio to TIAA to invest in the Real Estate Account to diversify. I planned on doing it last year, but TIAA wasn't able to send electronic signed forms evidently so Vanguard did nothing with the paperwork. I'm okay with it. I just wanted to open a position with TREA because it's not available to the public and its different from REIT's....


In my opinion, since you are only 35, your investment horizon is long. In this case, you will be better of with VNQ. In fact, at this age, I will invest 100% in VTI and QQQ and will not worry about my asset allocation for two more decades. That's just me. I won't even think about annuity for two more decades.

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