Is 4.388% attractive to you?

[MikeTN]

I will repeat somewhat more strongly: I think the OP is mistaken that he can get 4.338 percent from a TIAA retirement annuity on money contributed to it this year. I'm pretty sure that new money gets only 3 percent this year.

[pb4uski]

Quote:

Originally Posted by ERD50 OK, but then the surrender charge would need to be factored into the calculation. Looking at your second paragraph - how the heck would anyone evaluate this? It's a moving target. -ERD50

Yes, it is a moving target - welcome to the world of deferred annuities. Typically, the insurer will declare a crediting rate for the coming year for deferred annuities that have their anniversary in the coming month. Setting the crediting rate is a delicate balancing act of keeping the rate competitive so the money doesn't run out the door (especially money that isn't subject to surrender charges) and maintaining/improving profitability.

[nun]

Quote:

Originally Posted by MikeTN I will repeat somewhat more strongly: I think the OP is mistaken that he can get 4.338 percent from a TIAA retirement annuity on money contributed to it this year. I'm pretty sure that new money gets only 3 percent this year.

3% is the minimum.....there is an additional credit of 1.387% above that this year for accumulations.

TIAA uses a whole different set of interest rates for the payout calculations. I have just looked at turning my TIAA-Traditional account into an annuity and the quote I got was for a minimum 7.14% payout rate for a single life annuity starting at age 55. About 50% of my account amount gets a 7.75% payout interest rate as the contributions were made before 1992 and the rest has various rates down to 3%. This seems like a good option to provide some guaranteed income.

[veremchuka]

No.

4.3% looks good today based upon the past few years, what about 5 or 10 years from now? Inflation may be higher than 4.3%.

[nun]

Quote:

Originally Posted by veremchuka No. 4.3% looks good today based upon the past few years, what about 5 or 10 years from now? Inflation may be higher than 4.3%.

But it might not be.....and what about getting 7.75% interest rate (not payout rate) on a lifetime annuity for a 55 year old male.

[veremchuka]

Sorry I may have not understood (wasn't there a link? I did not read the link.) If it is fixed for life that's what I was replying to. I'm not a fan of annuities but I have a pension and SS, well at least for now.

[MikeTN]

Op says he can get 3 percent basic interest plus 1.338 percent additional amount from new money in a TIAA retirement annuity.

The reason I think he is mistaken is because I have 2 TIAA annuity accounts and both show only the 3 percent, no additional amounts for new money but there is additional amount for old money.

Perhaps one of us should call TIAA to see who is correct -- I hope he is but I doubt it.

[nun]

Quote:

Originally Posted by MikeTN Op says he can get 3 percent basic interest plus 1.338 percent additional amount from new money in a TIAA retirement annuity. The reason I think he is mistaken is because I have 2 TIAA annuity accounts and both show only the 3 percent, no additional amounts for new money but there is additional amount for old money. Perhaps one of us should call TIAA to see who is correct -- I hope he is but I doubt it.

I did check with TIAA. My accumulation rate for the current vintage is 4.387% made up of 3% guaranteed rate and an additional rate of 1.387%.

The payout interest rates are different, but range from 3% for current vintages up to 7.75% for pre 1992 contributions. As I have a lot of pre 1992 contributions when I do the single life annuity calculation for a 55 year old male I get a payout rate of 7.14%. I am getting a detailed quote from TIAA to see the life expectancy and payout interest rates they actually use.