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Vanguard vs TIAA
Old 05-08-2018, 09:13 AM   #1
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Vanguard vs TIAA

New to this forum and am looking for advice. Hoping to retire early in 2022 and just met with my TIAA advisor. I have about $350k in my account, $140k in the guaranteed (canít move it). Iím leaning toward moving all that to an annuity in four years to have some certainty of income in retirement. I know there are pros and cons to an annuity and would be interested to see what your thoughts are, but my other question is that I have other money ($250k) in mutual funds and money market funds and am thinking about investing another $100k (separate from the other monies) in either the TIAA variable rate annuity or the vanguard target retirement fund 2025. House is paid off and I have no other debt other than medical insurance, utilities, taxes when I retire in 2022. Any advice would be appreciated.
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Old 05-08-2018, 09:25 AM   #2
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Originally Posted by 2retire2022 View Post
I have about $350k in my account, $140k in the guaranteed (can’t move it). I’m leaning toward moving all that to an annuity in four years to have some certainty of income in retirement. I know there are pros and cons to an annuity and would be interested to see what your thoughts are, but my other question is that I have other money ($250k) in mutual funds and money market funds and am thinking about investing another $100k (separate from the other monies) in either the TIAA variable rate annuity or the vanguard target retirement fund 2025.
You haven't really provided enough information to provide much of an analysis. So I'll have to just focus on what you wrote and ignore everything else.

Aside from all the cons for annuities, I would never tie up a significant portion of my funds into an annuity anyway.

Of the choices you have presented, I'd strongly urge you to choose the Vanguard 2025 fund over yet another annuity.
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Old 05-08-2018, 09:46 AM   #3
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Look at your TIAA fund fees vs. VGI.
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Old 05-08-2018, 11:01 AM   #4
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Indeed. So many people mention "an annuity" like they are even all the same. I haven't seen any really post the details of the promised returns or fees. Vanguard 2025 fund (and all their other funds for that matter) offer public display of their past performance, holdings and fees (very very low of course)
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Old 05-08-2018, 02:12 PM   #5
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FWIW, I always argue that there is no such thing as a "fixed" annuity. Yes, the payment dollars may be fixed, but what they can buy is constantly declining. After 20 years it is highly likely that the "fixed" dollar annuity will buy less than half of what it buys today. Worse, unless you can accurately predict inflation you also can't predict the real value of the annuity.

TIPS are the best, though imperfect, solution to the "I want safety and preservation of buying power" problem.
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Old 05-09-2018, 05:12 AM   #6
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Based on responses and knowing that $140k will have to be in an annuity - is there ever an upside to having one? And understanding that inflation will play a part in the proceeds down the road, are there other alternatives (other than the TIFís) that would help keep up with inflation for the other $? I understand pulling 4-5% a year out of assets, but what do others on this forum put their money into for the long term thatís also not too risky?
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Old 05-09-2018, 08:45 AM   #7
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Originally Posted by 2retire2022 View Post
Based on responses and knowing that $140k will have to be in an annuity - is there ever an upside to having one? And understanding that inflation will play a part in the proceeds down the road, are there other alternatives (other than the TIFís) that would help keep up with inflation for the other $? I understand pulling 4-5% a year out of assets, but what do others on this forum put their money into for the long term thatís also not too risky?
The upside of your "forced" annuity is that it helps establish a floor of income when combined with you Social Security. The hope is that that floor will cover your basic needs. You can then invest your remaining funds in a stock/bond mix that meets your risk tolerance. Vanguard has a good risk test on their website to help you determine the mix that may be best for you. I am retired for 2 years and at a 50/50 mix. That does not mean it is the right mix for you, just an example. You can also invest low cost at Fidelity and Schwab as long as you invest in low cost index funds.

https://personal.vanguard.com/us/FundsInvQuestionnaire
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Old 05-09-2018, 10:00 AM   #8
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Thank you so much for the specific advice. It was exactly what I was looking for as I was at a loss where to start.
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Old 05-09-2018, 02:06 PM   #9
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... are there other alternatives (other than the TIF’s) that would help keep up with inflation for the other $? ...
Well, we have about 20% of our portfolio in TIPS. Without doing a lot of mathematics that ultimately cannot predict the future anyway, we think that will be enough money to allow us to weather an inflation storm without seriously cutting back on our spending.

For tax reasons, TIPS are best held in a tax-sheltered account.

Quote:
Originally Posted by 2retire2022 View Post
... I understand pulling 4-5% a year out of assets, but what do others on this forum put their money into for the long term that’s also not too risky?
"Too risky" is a judgment that only you can make. As they say: "Do you want to eat well or do you want to sleep well?" Start with one of the kind of standard AAs, like 50% equities and 50% fixed income, then cut back on the equities until you sleep well. Also, do not fool yourself into taking risk in your fixed income tranche by chasing yield. This is a very common mistake IMO.

BTW, at your age IMO you should not have significant $$ in money market funds unless you have an unusual need for liquidity. At least move it to government bonds, bought on the auction and NOT paying bond fund fees.
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Old 05-09-2018, 02:44 PM   #10
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I had been happy with my megacorp 401k three years into retirement. Then, a couple of years ago I started seeing a difference in performance and I was invested in some pretty run-of-the-mill stock and bond funds like S&P 500. This December I moved my 401K to Vanguard. The change in performance was the biggest reason for moving the money when I did. Another factor for me was the desire to do Qualified Charitable Distributions as part of my Required Minimum Distribution when I turn 70 1/2. You have to do QCDs from an IRA within a couple of years anyway. A factor for keeping my stash in the 401K for as long as possible is that it offers better protection against creditors and bankruptcies, etc. Lots of deciding factors, but for me, performance across comparable funds was at the top of the list.
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Tiaa vs. Vanguard
Old 05-10-2018, 09:02 AM   #11
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Tiaa vs. Vanguard

I faced the same choice a few years ago. I'm happy with the TIAA traditional which I annualized at age 66, and 70. I left some of my remaining funds in the TIAA supplemental account because it is liquid and pays over 3 percent interest. A little kept in TIAA real estate too as it owns commercial real estate directly and is well managed. But most of my funds are in the stock market and for this I prefer vanguard as they have lower costs
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