TIAA Introduces Annuity Paycheck Advantage to Boost Retirement Income

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TIAA, a leader in lifetime income solutions, has unveiled the TIAA Annuity Paycheck Advantage, a new metric designed to highlight the significant additional income retirees can gain by combining a TIAA annuity with a 4% withdrawal rate, rather than relying solely on the standard 4% withdrawal rule.

“Retirement advice often emphasizes savings targets, but understanding safe spending levels in retirement is a much tougher challenge,” said Kourtney Gibson, Chief Institutional Client Officer at TIAA. “One of the biggest fears in retirement is outliving one’s savings. The TIAA Annuity Paycheck Advantage serves as a new ‘North Star’ for first-year retirees, offering higher guaranteed payouts and greater clarity on safe spending amounts.”

The TIAA Annuity Paycheck Advantage demonstrates, in percentage terms, the difference between what a first-year retiree can withdraw using a traditional spending strategy and what they could receive by converting a third of their retirement savings into lifetime payments guaranteed by TIAA’s flagship TIAA Traditional annuity, alongside a 4% withdrawal from the remaining balance. The conventional method, known as the 4% rule, suggests that new retirees withdraw up to 4% of their savings in the first year to have a reasonable chance of their savings lasting for 30 years.