To those with TIAA Accounts, Annuity Payout Increased in Nov.

[cyber888]

I noticed in my TIAA website that the Payout for TIAA Annuities had a big increase in November. It use to be around 6.5% - 6.7% in October for the age range I was looking at. I'm monitoring it, because I'm retiring in a few months at 59.5 yrs old and plan to convert part of my 401K to annuity at some point.
BTW, this is for a joint Lifetime annuity with DW with 10 years guarantee to a beneficiary in case we both pass.

At 59.7 years old, Payout rate is 7.12%
At 60.5 years old, Payout rate is 7.20%
At 61 years old, Payout rate is 7.26%
At 62 years old, Payout rate is 7.36%

I'm now more convinced to take the plunge.

 

[njhowie]

As always, just remember that payout rate is not yield.

 

[cyber888]

As always, just remember that payout rate is not yield.

Sure, but it's a Lifetime annuity, so you get paid sooner

 

[TheWizard]

Also note that TIAA Traditional payout rates vary depending on how long the funds have been in it.
Loyalty bonus it's called...

 

[TheWizard]

Sure, but it's a Lifetime annuity, so you get paid sooner

I'm not sure "sooner" is quite accurate...

 

[FargoI]

Keep in mind, TIAA payouts are comprised of a guaranteed amount and a variable amount. The variable amount is adjusted annually. At least that's my understanding.

On a related note, five (5) of my past transactions with TIAA were erroneously processed. These included rollovers, and banking transactions. Much of the effort to identify and assess fell on my shoulders. I subsequently received an apology and transactions were all corrected with no financial penalties or losses. Still, my confidence in the "back end" support is fractured.

 

[TheWizard]

Keep in mind, TIAA payouts are comprised of a guaranteed amount and a variable amount. The variable amount is adjusted annually. At least that's my understanding...

"Annually" isn't quite accurate.
They've managed to keep annuity income based on TIAA Traditional steady or slightly increasing for several decades now. We got a nice increase starting in January which was announced last December.
Next month we'll find out whether we get another unscheduled increase in January, 2023...

 

[FargoI]

The Wizard...Just noticed your reply, thank you.

Within TIAA's Group Retirement plans identified as "Traditional" accounts there are various product lines (options) for payouts. Purchasing a SP or Jt payor annuity (with or without guaranteed periods) is an option to achieve Lifetime payments.

Another option is to maintain one's contributions in the Traditional account which offers several investment options (guaranteed funds, cref/variable and /or real-estate fund). The guaranteed fund ties contributions to vintages - each vintage is comprised of two parts- a fixed guaranteed return and bonus rate calculated on an annual basis (March).

If one does not purchase a lifetime annuity from TIAA the remaining payout options for the Traditional fund include choices such as: Interest only, transfer payout annuity (e.g. ten years), RMD.

I am still trying to understand if there is a compelling reason to "annuitize" ( purchase a single or joint TIAA Lifetime annuity) with funds from the TIAA Traditional account versus staying the course and working within the investment and withdrawal parameters offered under the umbrella of the (Traditional) account. In my circumstance, the vintages I am holding have a min guaranteed interest rate of 3% and in 2022 the 'bonus' rates are between 2.5 and 3.25% for each vintage. Again, the bonus rates on TIAA Traditional Guaranteed funds are reset each March and could go up, stay the same, go lower or disappear entirely. Looking forward to learning from your and others experiences and knowledge.

 

[TheWizard]

Well Fargol, a "compelling reason" might be to have a hefty income in retirement to allow you to carry on in style without having to make 4% portfolio withdrawals to fund that style.

Most TIAA participants have decent employer "matches" to their tax-deferred 403(b) account and after 30 years or more have over $1M in their TIAA account.
So assuming you're in decent health when it comes time to retire, your question really should be: how MUCH of my $1M should I annuitize for lifetime income?
$100k?
$200k?
More??

I annuitized a bit too much back in 2013, mostly in TREA with some in Trad and some in CREF Stock.
Especially after starting age 70 SS two years ago, I now have a few thousand dollars of excess retirement income from those sources each month which I invest into stock index funds.
IOW, I have a negative withdrawal rate from remaining portfolio, which should be growing nicely for my remaining years...

 

[Lstansbury]

Compare the Tiaa payout with the immediateannuities.org calculator or even Stan the Man's rate list. You'll make almost twice as much the rest of your life going outside Tiaa.

I just got off the phone with two Tiaa reps who became irritated with me because I pointed out how the stated performance yield of 2.9% YTD on the website for my $25K didn't square with the 3.2% - 4.9% crediting rate also listed on the website description of the contract. They kept saying "oh no, don't look at page, let's look at another page." And then they finally found a page with the crediting number that made sense to them. The different buckets of money for crediting was one one wild description, but whatever.

I've already taken a big chunk out of tiaa annuity that was accumulating at a guaranteed 1% (whoop) and rolled it over to Fido this year.

Guess I'll be doing that again but will need to open a bottle of wine first. This is guaranteed to be a cluster.. I can't imagine having a lifetime annuity with these guys. Who knows how much you'll be getting?