What Will Be Covered in this Annuity Review?In this review, we will cover the following information about the TIAA Single Premium Immediate Annuity product:
- Product type
- Current rates
- Realistic long-term return expectations
- How it is used
- How it is most poorly used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in. We make the complex, simple.Back in the early 1900s, life expectancy was somewhere in the neighborhood of 41 years. Today, however, it is not uncommon at all for many people to live twice that long. This means that not only is it possible to spend a decade, two, or even three, in retirement but that it’s becoming more of the norm rather than the exception. However, while a nice long retirement can be very appealing to most people, it can be difficult at best to live comfortably if you don’t have enough money coming in each month to pay your living expenses. One way to help you ensure that you not only have an ongoing retirement income but one that could last for the remainder of your life is to purchase an annuity. These products, issued by insurance companies, will typically offer a lifetime income option that guarantees you an incoming cash flow for as long as you need it. But, before you run out and sign on the dotted line for an annuity, it is important to understand that not all annuities are alike. In addition to that, these products will often come with an insane amount of “fine print”, so while you may think that the product will offer you certain benefits, you may actually need to endure certain fees, charges, and/or tradeoffs in order to get the benefits you had anticipated. Therefore, because immediate annuities require that you contribute a large amount of money into the account right from the get-go, it is extremely important that you know exactly what it is that you’re getting into, as well as what could happen if you decide that you want to get out of it. That’s where we come in!
Annuity and Retirement Income Planning Information You Can TrustIf this is your first visit to our website, please allow us to officially welcome you to AnnuityGator.com. We are a team of experienced financial professionals who provide highly comprehensive, and non-biased, annuity reviews. We have been doing this for many years now – much longer than some of the other annuity websites that you may have run across in your search for annuity information. In fact, there are a number of copycat sites out there that will make bold claims about their annuity offerings but are really just looking for your name and contact information. We have been doing this for quite some time now, and because of that, many consumers look to us as a highly trusted source of annuity information – especially if they are not quite sure what to look for in a possible annuity purchase. If, by chance, during your quest for more details, it is likely that you have noticed certain sites that tout their “low fees,” “high-income payouts,” or “top-rated annuity carriers.” Unfortunately, although these claims may initially sound very enticing, these websites are only telling you some of the information. So, prior to moving forward with a decision – either to buy or to move on – just be certain that you have all of the pertinent facts. So, if you’re ready to get started, let’s dive in!
The TIAA Single Premium Immediate Annuity at a Glance
|Single Premium Immediate Annuity
|Type of Product
|Single Premium Immediate Annuity (SPIA)
Opening Thoughts on the TIAA Single Premium Immediate AnnuityFor more than a century now, TIAA-CREF has been serving investors and policyholders in the areas of growing and protecting wealth. This company has a primary focus on serving the financial needs of those who work in the academic, government, medical, cultural, and other non-profit fields. TIAA-CREF sports a long list of awards and accolades, including being the only company to win the “Best Overall Large Fund Company” for six years in a row, and the “Best Mixed Assets Large Fund Company United States” for three years running, from Thomson Reuters Lipper. The company has also been ranked as a top-five Best Fund Family from Barron’s (in 2017), and as of mid-year 2018, 73% of the company’s mutual funds have received a Morningstar overall rating of 4- or 5-stars across all asset classes (based on risk-adjusted returns). In addition, the four credit rating agencies all give TIAA-CREF their highest possible ratings. These include a(n):
- A++ from A.M. Best
- AAA from Fitch
- Aaa from Moody’s
- AAA from Standard & Poor’s
Before we get into the in-depth details, we have some legal disclosures to present…This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. The Principal has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners. Want to more about how annuities really work? Click here to receive our updated annuity report.
How TIAA Describes the Single Premium Immediate AnnuityAccording to the TIAA brochure, the Single Premium Immediate Annuity is a product that allows you to “build retirement income your way.” This annuity allows you to turn a lump sum of money into a steady income stream right way. And, this money doesn’t necessarily have to be your hard-earned retirement savings. For example, if you have inherited funds, sold a business or other large asset, or received a lump sum such as a severance package, the Single Premium Immediate Annuity from TIAA could provide you with a steady income stream to either get you through an income “gap,” or for the remainder of your lifetime. Unlike most other single premium immediate annuities that are offered in the market today, the SPIA from TIAA-CREF lets you choose either from fixed or variable income payments. Also, you decide how your money is invested. Here, for example, you are able to choose from one or more of the eight variable investment accounts – which means that your income payment amount could rise (or fall) with the market. Alternatively, you could choose the fixed account to receive guaranteed income payments. And, if you want to change your options, you also have the opportunity to move your funds among these accounts. If you have a spouse, partner, or another individual that you would also like to assure of having an ongoing income, you can opt for the two-life annuity here, too. And, you can set up the timing of the income payments to be received monthly, quarterly, semi-annually, or annually.
How an Insurance or Investment Professional Might Pitch this Annuity to a ClientIf you’ve been presented the TIAA Single Premium Immediate Annuity (SPIA) by your current insurance or financial advisor, there are likely a few key items that he or she touched on in order to entice you to purchase it. First, this product can offer you a guarantee when it comes to income in retirement. This includes providing you with an income stream that will last throughout the remainder of your lifetime, as well as the life of another individual if you so choose. Plus, you have the opportunity to increase the amount of your income over time – based, of course, on how the underlying investment that you choose performs. (So, while this could be a nice benefit, it could also be a potential drawback, depending on the volatility and movements of the stock market). There are some other areas that you should consider, too, before you commit a large chunk of money to this annuity. For instance, once this annuity has been converted to income, the decision is non-reversible. This means that you will not be able to dig into your lump sum of cash – even if you have a financial emergency. Given that, it is imperative to keep in mind that the purchase of an annuity is a long-term decision.
What About Taxes and/or Fees?As with other annuities, there are some tax- and fee-related areas to be aware of with the TIAA-CREF Single Premium Immediate Annuity. For instance, in this case, if you purchase an immediate annuity with after-tax dollars, then each of your annuity income payments that are made will consist of both a taxable income portion and a return of premium portion (which is non-taxable). However, if you have used money from a traditional IRA or employer-sponsored retirement plan (such as a 401k) where the money you contributed to the annuity has not yet been taxed, then you will owe taxes on 100% of the income distributions you receive. This, in turn, can make a big difference in the amount of income you are actually able to spend.
The Annuity Gator’s End Take on the TIAA Single Premium Immediate AnnuityAlthough an immediate annuity might not be right for everyone, the TIAA Single Premium Immediate Annuity (SPIA) could be a good option for you if you are seeking the following benefits:
- A reliable income stream right away (or one that starts within 12 months after purchasing the annuity)
- A place to move funds from an IRA, 401(k), or another type of retirement plan so that you can convert it from a lump sum of savings into income
- A solution to the worry about running out of income in retirement
- Are sensitive to market movements
- Feel that you may need some (or all) of your funds for other needs
- Do not plan to use the annuity for income