TIAA’s proprietary lifetime income annuities, which had been available to 401(k) plans since 2022, are now available to all Americans through the TIAA IRA, the company announced Monday.
“We are providing a simple solution to the more than 55 million Americans who do not have access to a retirement plan at work.”
TIAA’s Colbert Narcisse
While TIAA has been historically dominant in providing guaranteed pension-like retirement checks to millions of workers in the nonprofit, academic and medical fields for over a century, corporate 401(k) plan sponsors and other defined contribution plan types gained access to TIAA’s guaranteed lifetime income through the TIAA Secure Income Account in 2022 with the help of the SECURE Act.
Now, any new enrollee in a TIAA IRA can select among TIAA’s annuities, including TIAA Traditional and the CREF variable annuities. After choosing annuitization, TIAA will send retirees monthly checks for as long as they live.
“We know that steady and reliable income, not a certain dollar amount in the bank, matters most to people when they think about their financial security. TIAA believes having a financial plan for retirement, with holistic financial advice and access to guaranteed investment options, can help provide income in retirement and help millions of Americans retire with dignity,” said David Nason, CEO of TIAA Wealth Management and Advice Solutions.
“The American retirement system is simply not working for far too many people. We are providing a simple solution to the more than 55 million Americans who do not have access to a retirement plan at work[i],” said Colbert Narcisse, chief product and business development officer at TIAA. “Through the TIAA IRA, Americans have the option for pension-like retirement checks that can help provide certainty they will have money to spend for the rest of their life.”
Boosting retirement income
Fixed annuities provide income certainty, and importantly, they can also often provide more income to retirees than a 4% withdrawal strategy. This is known as the TIAA Annuity Payout Advantage, the company said in a press release.
The metric shows that, in 2025, retirees could earn 33% more money in their first year of retirement than they would if they used the 4% rule alone. For example, a 67-year-old retiree with $1 million in savings could spend $40,000 in the first year of retirement using the 4% rule. But, if the same person used one-third of their savings to provide income from their TIAA Traditional fixed annuity and began receiving payouts on March 1, 2025 (and withdrew 4% of the remaining two-thirds), they would get $53,154 to spend in the first year of retirement—or 33% more income.
For employees who have contributed to TIAA Traditional inside their retirement plan over their working years, the payout rate can be significantly higher. TIAA calls this exclusive feature the TIAA Loyalty Bonus.
The longer someone has saved in TIAA Traditional, the larger their Loyalty Bonus, and the more income they could get when lifetime income payments begin. Future Loyalty Bonuses are not guaranteed but, historically, a plan participant who contributed for the previous 30 years received a 15% larger payout upon annuitizing.
This can be significant: Applying the historical average for the long-term Loyalty Bonus to the March 2025 payout rate, a 67-year-old annuitant with $1 million in savings could receive $57,127 per year compared with the $40,000 they would get by making 4% withdrawals alone.
Instead of a 33% Annuity Payout Advantage, they’re getting 43% more first-year income.
TIAA provides secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions. It paid more than $5.9 billion in lifetime income to retired clients in 2024 and has $1.4 trillion in assets under management (as of 12/31/2024).
SEE ALSO:
• Nestimate Introduces In-Plan Annuity Evaluation Tool
• TIAA, Nuveen Reach 1M Accounts for Target-Date Lifetime Income Series
• Vestwell and TIAA Introduce Lifetime Income Offering
[i] Wharton Pension Research Council. March 2022
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
