Riddle me this; TIAA SPIA payout rate 9.45%!

[nun]

I have a small balance in TIAA Traditional and just did an online quote to turn it into a single lifetime annuity starting at age 63 and a payout rate of 9.45% was quoted. I've been with TIAA for over 35 years so I think I'm getting some uplift for having an old contract, but this seems amazing. More generally with interest rates higher than they've been for a while are people looking at annuities again and thinking of locking in the rates with at least some of their DC accumulations?

 

[pb4uski]

That seems like a really attractive payout rate for a 63 yo annuitant. If you do take it, watch your six.

 

[nun]

That seems like a really attractive payout rate for a 63 yo annuitant. If you do take it, watch your six. :>)

I was looking to close out my TIAA account as it doesn't have much in it and did a double take at the payout rate and wondered if others had seem something similar.

 

[TheWizard]

I have thousands of dollars coming in each month since 2013 from TIAA annuities.
I highly recommend them for a portion of your tax-deferred money...

 

[nun]

I have thousands of dollars coming in each month since 2013 from TIAA annuities.
I highly recommend them for a portion of your tax-deferred money...

I have a small amount in TIAA from a job early in my career. It's just been sitting there compounding. I don't really need the money, but just wanted to clean up the old "zombie" account. I was going to leave it until I was closer to RMDs, but the pay out rate of 9.45% has focused my mind. Interest rates right now are high so it might be a good time to take the annuity, but if I wait the balance will grow tax free and the older I get the payout rate should increase.

The payout rate seems just too good.

 

[FargoI]

Wizard. Have any of your rates decreased since annuitizing? Meaning the guaranteed portion, the variable portion, or the loyalty portion .... collectively representing the original payout rate you were quoted?

 

[cyber888]

I have a small balance in TIAA Traditional and just did an online quote to turn it into a single lifetime annuity starting at age 63 and a payout rate of 9.45% was quoted. I've been with TIAA for over 35 years so I think I'm getting some uplift for having an old contract, but this seems amazing. More generally with interest rates higher than they've been for a while are people looking at annuities again and thinking of locking in the rates with at least some of their DC accumulations?

Take it and don't blink. I took mine last year.
It was only at 7.15% payout rate. but I was only 59.5 when I started take it and not 63, so I took the amount 3.5 years earlier. And it was for a double annuity with wife. Single annuity will always have a higher payout.
You're also been with Tiaa for 35 years, so you have an advantage.
Just do it.

 

[nun]

Take it and don't blink. I took mine last year.
It was only at 7.15% payout rate. but I was only 59.5 when I started take it and not 63, so I took the amount 3.5 years earlier. And it was for a double annuity with wife. Single annuity will always have a higher payout.
You're also been with Tiaa for 35 years, so you have an advantage.
Just do it.

Yes that's what I was thinking - on my annuity quote I have the following note:

"Your TIAA Traditional Income Payout Rate is 9.45% (vs. 7.4% payout rate for new contributor.)"

Even though the rule of thumb is to leave tax free money alone until it's either needed or RMDs are needed I think I might just take the annuity now - the 10 year payout annuity is not attractive as I'd have to make double digit returns on the money to make it better for an average life expectancy.

 

[cyber888]

Yes that's what I was thinking - on my annuity quote I have the following note:

"Your TIAA Traditional Income Payout Rate is 9.45% (vs. 7.4% payout rate for new contributor.)"

Even though the rule of thumb is to leave tax free money alone until it's either needed or RMDs are needed I think I might just take the annuity now - the 10 year payout annuity is not attractive as I'd have to make double digit returns on the money to make it better for an average life expectancy.

If you don't take it now, the Payout will go down when Interest rates go down. I have been watching the payout for a while, and I sometimes panicked when it went down - that's when news came out that interest rates peaked, but No - the Feds kept hiking the rates further. So, once I reach 59.5 I took it.

 

[nun]

If you don't take it now, the Payout will go down when Interest rates go down. I have been watching the payout for a while, and I sometimes panicked when it went down - that's when news came out that interest rates peaked, but No - the Feds kept hiking the rates further. So, once I reach 59.5 I took it.

If interest rates go down the payout rate will follow, but the rate will increase the older I get and the amount in the account will also increase and obviously how long I live is a factor. But at 9.45% I'm tempted just to take it now, have the extra bit of income and pay the tax and remove the account from my RMD calculations.

 

[cyber888]

If interest rates go down the payout rate will follow, but the rate will increase the older I get and the amount in the account will also increase and obviously how long I live is a factor. But at 9.45% I'm tempted just to take it now, have the extra bit of income and pay the tax and remove the account from my RMD calculations.

Yeah, sure. I remember that if I waited till 63 years old, a dual annuity for me and wife was around 8.50%. You got a better deal. I did not calculate for Single annuity.
But who knows what the future rates would be when the Fed starts cutting rates.

 

[Out of Steam]

I've been the process of looking over our retirement accounts over the past couple of days, which I've talked about in a couple of other comments. With current high interest rates, the thought of my wife taking a life annuity from her TIAA Traditional comes to mind. It is about 25% of her retirement assets.

Because she's had some health issues, we should take either a period of certain return (such as 10 years), or a joint annuity with me (possibly a 50% payment). In addition to locking in current interest rates, it would partly replace the (nearly) half of my pension she would lose if I die first.

Has anyone done this lately? Sounds like it's worth getting a quote.

 

[pjm-7]

Yep, those TIAA annuities even on small amounts can pay well. My mom had a small account from when she was teaching full-time. When she had the position part-time it did not include any retirement benefits (it was an old contract), so her contributions were smaller. She split the account between TIAA traditional and the CREF stock account. She started the payments in 1986. When she passed in 2012 the payment was reduced to 2/3 to survivor, my dad. With the stock fund the payments continued to grow. Those payments lasted until his passing 2019. A total of 33 years. It was always a welcome payment.

 

[TheWizard]

Wizard. Have any of your rates decreased since annuitizing? Meaning the guaranteed portion, the variable portion, or the loyalty portion .... collectively representing the original payout rate you were quoted?

Sorry for the delay.
My annuity income based on TIAA Traditional has stayed the same or gone up since 2013, never decreased.
My VARIABLE annuity income based on CREF Stock and TREA has gone up and down from month to month, mostly up...

 

[TheWizard]

I've been the process of looking over our retirement accounts over the past couple of days, which I've talked about in a couple of other comments. With current high interest rates, the thought of my wife taking a life annuity from her TIAA Traditional comes to mind. It is about 25% of her retirement assets.

Because she's had some health issues, we should take either a period of certain return (such as 10 years), or a joint annuity with me (possibly a 50% payment). In addition to locking in current interest rates, it would partly replace the (nearly) half of my pension she would lose if I die first.

Has anyone done this lately? Sounds like it's worth getting a quote.

I annuitized a portion of my TIAA accumulation at age 63 back in 2013.
Then I delayed SS until age 70.
So nowadays I have about $50k per year of excess income that I invest into stock index funds.
It's a fun situation to be in...

 

[Out of Steam]

Yep, those TIAA annuities even on small amounts can pay well. My mom had a small account from when she was teaching full-time. When she had the position part-time it did not include any retirement benefits (it was an old contract), so her contributions were smaller.

One advantage of annuitizing this money is that my wife's TIAA contract goes back to the late 1980s, so has a high guaranteed rate.