Call_Me_Op wrote: ↑Mon Jul 04, 2022 8:05 am
I notice that TIAA has a
TIAA Stable Value Fund and a
TIAA Traditional Annuity. Can someone explain the difference - and why they need both?
Note that TIAA has a lot of different products for different customers. They have annuity products with very high costs, and annuity products with very low costs. It's typically your employer's contract, and the structure (403(b) for example) of the account that makes the difference.
I think that many people spend too much time decrying the withdrawal restrictions on the highest-yielding TIAA Traditional accounts (read that clause again; There's a connection between higher yield and longer-term investments ... ) and not enough time "worrying" about the fact that TIAA Traditional is not a fractional-ownership product, as are Mutual Funds and Variable Annuities.
Now, because of their 100-year record, and my almost 50-year experience,
I personally don't worry about either of those issues. But I just don't have a problem with tying my most conservative asset-category
retirement funds up for eight to ten years. And I can do my proportional RMDs from it without any special planning. Besides, for most of my life, the money that's been in TIAA Traditional the longest is usually the Vintage that is close to the highest payoug. (Of course that's
less true during a period of sharp changes in prevailing interest rate.) It has virtually "always" been the category with the highest Payout percentage when annuitizing. (I acknowledge that not everyone annuitizes.)
But a Stable Value Fund provides a product for people who want a more familiar and more liquid structure to their more conservative asset category. Is it safer than a contract with an insurance company that simply promises what they will do for you? Your call.