TIAA Expands Annuity Availability to Its IRAs

TIAA is expanding the availability of its proprietary lifetime income annuities outside of employer-sponsored retirement plans, making them an option in the TIAA IRA.

After years of serving the 403(b) marketplace and, more recently, introducing lifetime income solutions to 401(k)s, new enrollees in a TIAA IRA can now select among TIAA’s annuities, including the TIAA Traditional and CREF variable annuities. 

“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,” 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.”

Increasing Retirement Income with Annuities

TIAA says workers putting some of their savings in fixed annuities can often provide more income to retirees than a 4% withdrawal strategy.

According to the company, 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, the company shows an example of a 67-year-old retiree with $1 million in savings who, using the 4% rule, could spend $40,000 in the first year of retirement.

However, by purchasing a TIAA Traditional fixed annuity with one-third of savings and withdrawing 4% of the remaining two thirds, that person would get $53,154 to spend in the first year of retirement, assuming he began receiving payouts on March 1, 2025.

For employees who have been “long-term contributors” to TIAA Traditional inside their retirement plan during their working years, TIAA offers what it calls a loyalty bonus percentage. It says this can lead to higher payouts at upon annuitizing compared to a new contributor who annuitizes an equal amount at the same time.

TIAA 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 December 31, 2024.