After discussing things with my wife and sleeping on it I just sold my investment in TREA in my IRA and transferred it to TIAA Traditional. Our distribution plans are now set through the remainder of 2023.
In 2020 (the current year) we will spend cash from our after tax accounts
In 2021 through 2023 we will draw from 1) My wife's SS including my restricted application for benefits so 1 1/2 of her benefit 2) interest only draws on guaranteed accounts including TIAA Traditional in my 401K 3) We will draw 1/3 of the TIAA Traditional in my IRA each of these years.
With this approach we will leave our equity investments in place and the soonest we would need to draw from them would be 2024. We could push that off to 2034 if we draw down our TIAA Traditional and/or Bond funds over that ten year period. If SS benefits are not cut I will begin taking my SS when I turn 70 in 2023 which will help. However, given the poisonous atmosphere in Washington I am not optimistic about our country's ability to stabilize SS without benefit cuts.
Like Bikechhcuk, as of this evening I have decided to sell my TREA and put it into TIAA IRA Traditional (for now). Going to sleep on it and contemplate a bit more in the morning but that's the plan for now. Would be very interested in any comments.
The sleep factor is very important.
It's not as if whatever decision you make is irreversible.
I don't sense that regret will be a major factor with you, Etoile, as you have never come across as greedy.
Best wishes to you and your family,
One thing that I do not understand.
My wife's Roth IRA with TIAA was 100% Real Estate and my Traditional IRA with TIAA was 100% Real Estate and both have been 100% in TREA all year and since we started these smaller accounts a couple of years ago. After moving these funds to Traditional yesterday the TIAA web site shows that my wife's returns on her Roth are positive year-to-date and my YTD returns on my Traditional IRA are negative.
I am wondering if this is a mistake as I do not understand how this is possible. I will triple check but I am 99.9% sure that this is what the Web site is showing. I suppose that I should pose the question to my TIAA Wealth Management Advisor who has been consistently helpful in the past. Before I do that does anyone have a possible explanation?
Selected recent prices
2/20/20 $442.0729 [recent peak]
So, it is down -1% from the recent peak.
I watch for -3% down and that price would be $428.81.
TREA on 1/1/20 440.42
TREA yesterday (3/16/20) after closing 437.67 (This is the relevant value for you two since you two moved the funds to TIAA Trad yesterday.)
Thus TREA YTD drop is just over 0.62%.
If this is what the website shows for you, no surprise. Based on what you wrote, this is what the website should show in your wife's case too.
Possible explanation: If your account values were updated after yesterday's close and if, for some reason, your wife's account values were not updated yet, then no surprise. If we consider the account values after closing on 3/15/20, TREA was slightly positive YTD since its closing value on 3/15/20 was 440.72, which is slightly higher than 440.42. If this is the reason, your wife's TREA should show close to 0.07% gain YTD.
This is clearly a storm in which almost everything will be damaged. But I don't see a 2008-style threat to TREA. The great recession was brought on by mortgage lending. The current troubles are not especially aimed at commercial property. I suspect that of all equity investments TREA will do as well as any and much better than most. It certainly has only bent slightly so far.
I am curious to see the 10-year growth numbers for TREA and REITs as of yesterday's close. TREA is going to look awfully good in comparison. Rightly or wrongly, I'm not looking for REITs to be a leading indicator this time for TREA's performance. REITs are highly volatile by nature.
Thanks for the comments so far. Haven't "pulled the plug yet" but I'm on course right now. In response to Bob's and Yogi's comments I would say a few things:
1) I have found that TREA has provided adequate returns (along with a few other income streams - Social Security, Annuities, and a bond fund of sorts) to provide sufficient income for our desires and still allow a small growth in the basis. While it is sometimes tempting to try and make more, the ease and peace of mind for this simplistic approach has won out.
2) An important corollary to 1) is that under current rules and pricing structures TREA provides the safety of lagging the market and the reassurance that you can transfer out without experience big losses during troubled times (which is now coming into play for the 2cnd time in my experiences with it as my mainstay).
3) A second corollary to 1) is that I am hesitant to leave TREA because I don know the rules won't change further and I will not be able to get back in.
4) I think that having a rule to follow (such as 3% drop from recent high) is a smart way to go. However, I see little or no option for TREA to go up significantly in the near future and a very significant risk for going down given the upheavals from our global pandemic. This is a unique situation where non-economic forces are causing market upheavals of unprecedented proportions.
I agree with Retire2ski's analysis. I'm also familiar with "Yogi's Rule."
For me there are other factors in decisions that I would make about my investment portfolio: my employment status (retired since 2014), age (75), access to TREA in future (employer has shut off any new purchases), TIAA rules (maximum of 1 withdrawal from TREA per calendar quarter), what would I do with the cash received by withdrawing from or closing out TREA.
On the last point, money that I transferred from TREA a few weeks ago went directly into my money-market account, which is where I draw my monthly RMD's from.
Just an update. Transferred out of TREA (IRA traditional and Roth) and into Tradition (IRA traditional and Roth) with no problems. It was nice to exchange on an up day. I see that Learner made a quick decision to do the same yesterday. His thinking is well stated and amplifies what I tried to express in my shorter posts. Like Learner, I feel that I will be grateful if I can get back in when things smooth out. Whether that's this year, next year, or a longer time into the future. If not I will certainly be looking here for perspective and guidance about avenues to pursue. I feel that this move protects against a "clear and present danger" as well as the increasing "unknown risk of the future",
Just want to add a Thank You to all the participants here. It is a very welcoming and helpful place to come for insight.
I have about 15% of my TIAA in TREA. Most of it is in a GSRA. I am now thinking about moving two-thirds of that (all in a GSRA) into Traditional. I will sleep on it and may pull the trigger tomorrow. Maybe.
On a busy down day, I was a bit shaken by this T-REA supplemental prospectus. Basically, it can now blame coronavirus for things from here on.
I have a long held suspicion. Property valuations are not precise and there is a range of estimates. When there are inflows, T-REA may use executive decisions to use higher end valuations. But when there are outflows, the executive decisions may be on the lower end valuations [now that big hitters like Juris and Learner are gone] - only an ex-TIAA insider may verify that. So my 3% down vigil goes on.
Just as a point of info:
a) TREA has previously partnered with SPG (a verifiable fact).
b) TREA previously dramatically cut its holding of SPG (a verifiable fact).
Not recommending anything to anyone.
Do what you think you gotta do.
Avoid Schadenfreude if you respect others.