TIAA is using the mystique of its retirement savings products to court individual investors.
The company is now offering its lifetime income annuities to all retirement savers through a new TIAA IRA program.
The program will give holders of TIAA's individual retirement accounts access to TIAA annuities through a program that's comparable to the TIAA Secure Income Account program for 401(k) participants.
"Now, all Americans have access to TIAA's lifetime income annuities regardless of where they work," TIAA says.
What it means: TIAA, a company that once focused on serving teachers and college faculty members, helped create the modern defined contribution retirement plan market by giving educators the ability to allocate plan assets.
Workers who had traditional pension plans, and no control over asset allocation, were jealous of workers with TIAA plans.
Today, TIAA may be making holders of ordinary IRAs jealous of 401(k) plan participants' income options.
That could help retail agents and advisors get clients excited about income planning ideas but force financial professionals to compete harder with what clients can get through their 401(k) plans and IRAs.
The history: Employer-sponsored retirement plans based on annuities have given workers easy ways to get income from plan assets for decades.
The providers of some mutual fund-based 401(k) plans also offered annuitization options.
But life insurers and asset managers are hoping new federal laws, such as laws that may reduce employers' exposure to lawsuits over annuity provider choices, will make in-plan annuities more popular.
TIAA took advantage of the new laws by adding an annuitization option program aimed at 401(k) plan sponsors in 2022.
The new TIAA program: TIAA IRA enrollees can choose annuities such as the TIAA Traditional contract and CREF variable annuity contracts.
In 2025, the company says, annuitized assets generated much more income than a 4% withdrawal strategy: a retiree with $1 million in assets could spend $40,000 using the 4% rule but get $53,154 by annuitizing one-third of the assets and applying the 4% rule to the rest of the assets.
The program can offer clients the protection of TIAA's account value guarantees, and that could have strong appeal for some clients if the recent market volatility continues.
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