Independent Review of the TIAA Single Premium Immediate Annuity
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 Trust
If 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
|Product Name||Single Premium Immediate Annuity|
|Type of Product||Single Premium Immediate Annuity (SPIA)|
|Phone Number||(800) 842-2252|
Opening Thoughts on the TIAA Single Premium Immediate Annuity
For 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
Today, with so many employers getting rid of their defined benefit pension plans, it has really become the responsibility of individuals to make sure that they convert their savings over into an income stream – and that the income continues to last throughout the remainder of their lifetime.
An immediate annuity like the Single Premium Immediate Annuity from TIAA could fit the bill for solving these issues. However, it is also important to remember that, just like any other financial product, not all annuities are the same. So, it is highly recommended that you take a good, close look at this – or any other annuity that you are considering – before you commit to it.
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.
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How TIAA Describes the Single Premium Immediate Annuity
According 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.
For all of the ins and outs of this annuity, you can check out the TIAA Single Premium Annuity’s full product brochure HERE.
How an Insurance or Investment Professional Might Pitch this Annuity to a Client
If 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 Annuity
Although 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
Where it works the worst:
However, even though the Single Premium Immediate Annuity from TIAA-CREF offers some nice benefits, this particular annuity may not be for you if you:
- 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
If you’ve been considering the purchase of an immediate annuity, but you are still unsure about moving forward because you just don’t know if this is the right financial vehicle for you, then it is imperative that you further your understanding of this product, and that you get all of your questions answered. We can assist you with any of the questions or concerns that you may have. Please feel free to reach out to us directly via our secure online contact form here.
With regard to this particular annuity, the good news is that you (as well as another individual, if applicable) can be assured that you will have income for as long as you need it, based upon the income payout option that you choose.
Even so, though, the only way to really know whether or not this annuity will work well for you and your situation is to have it tested. We can perform this testing for you, using our annuity calculator, and we will provide you the results at no charge or obligation. If you are interested in this information, just simply let us know here through our secure online contact form.
Have Any Additional Questions? Notice Any Mistakes in this Annuity Review?
We know that this annuity review may have been somewhat lengthy. So, given that, we truly thank you for sticking with us through thus far. However, we would much prefer to give you “too much” information in these reviews that not to give you enough. Therefore, if you felt that this annuity review was beneficial, please feel free to share it and forward it on to anybody else that you think may also be helped by it.
We also understand just how fast financial and insurance product information can – and does – change. So, if you did happen to notice any information in this annuity review that was out of date or needs updating, please let us know that, too, so that we can get it revised as soon as possible.
Are there any other annuities that you would like to also see reviewed?
If you have been shopping for annuities, it is possible that you’ve been presented with several different options. So, if you’ve come across any other annuities that are not included in our review database, please let us know that, too so that we can do our research and analysis, and add it to our site.
The Annuity Gator
P.S If you would like to read more of our TIAA annuity reviews here is a link to check out: