Over the last 20 years, retirees who chose lifetime income have seen their payment amounts increase 13 times at an average of more than 1% per increase, without ever experiencing a decrease. This is a unique benefit, made possible by TIAA’s not-for-profit heritage and our unwavering commitment to deliver outcomes that matter to you.*
* This illustration depicts a participant who contributed $87.59 each month to TIAA Traditional under the Retirement Annuity contract over the thirty-year period from January of 1965 through December of 1994 and did not take any withdrawals. Based on actual interest crediting rates, the participant’s accumulation would have been $131,875 on December 31, 1994. If the participant used this entire amount to purchase a single life annuity with a 10 year period certain guarantee beginning January 1, 1995, they would have received $1,000 per month in 1995. The chart depicts how that monthly payment amount would have increased over the first 20 years of their retirement. Although this does not represent a specific individual and past performance is no guarantee of future results, the amount of monthly lifetime income payments shown are what a participant would have experienced had they taken the actions on the dates described in this example.
It is important to note that long-term contributors to TIAA Traditional typically will receive higher initial lifetime income payment amounts than those that accumulate outside of TIAA Traditional and then transfer their retirement savings to TIAA Traditional shortly before beginning lifetime income. For example, if the same participant in the example above instead contributed the same amount to a hypothetical investment option that provided returns matching TIAA Traditional's interest crediting rates, he or she would have achieved the same terminal wealth of $131,875. If they then transferred that amount into TIAA Traditional in December of 1994 in order to obtain lifetime income, their initial monthly income payments in 1995 would have been approximately only $929 instead of the $1,000 that the long-term TIAA Traditional contributor enjoyed. Thus the long-term contributor's initial monthly payment was over 7.5% higher than that of the new contributor.
Source: TIAA-CREF Actuarial Department calculations.