Frequently Asked Questions
This Page Under Construction!
Please note that I'm not licensed to give financial advice, and you should not make any important investment decision based solely on information found on this page. This material is for general information only.

Contact me with comments on these F.A.Q.'s

TIAA-CREF's Own FAQs

About TIAA
About CREF


General TIAA-CREF Questions

The Answers

About TIAA

 What is TIAA?
Teachers Insurance and Annuity Association of America (TIAA) was created in 1918, using a cash grant from Andrew Carnegie.  He observed that many teachers had no funds for their retirement.  It is an insurance company chartered in New York State and regulated by New York's commissioner of  insurance.  It has a complex web of subsidiary companies that provide products and services, both directly to consumers and to the various companies of TIAA-CREF.  TIAA's charter says that it will be operated in a not-for-profit manner.  Until 1952, their main product was an annuity-only (i.e. periodic payments for life) program we know today as TIAA Traditional.  TIAA has an exceptionally high soundness rating from the companies that rate insurance companies.  TIAA Top

What is TIAA Traditional?/Why is there no Prospectus?
TIAA Traditional is an investment contract you make with the insurance company discussed above.  They promise to pay you a varying rate of interest (but never less than 3% until you retire) on all the money you deposit with them, and if you wish, to convert that investment to a life (or two-life, or life with a guarantee period, or lots of other options) annuity.  TIAA Traditional is not a mutual fund, so it does not have a prospectus, shares, or a daily share Net Asset Value. It's been available since about 1918. It is broadly similar to a Guaranteed Investment Contract or a Stable Value Fund, but is neither of those.  It is actually a contract, or promise, backed by the General Account of the insurance company TIAA. It is a "conservative" investment, but unlike a bond fund or even a Treasury Bond, the daily value of your accumulation can "never" decrease (subject to the guarantee by TIAA.)  .PDF Data Sheet at TIAA-CREF    Longer .PDF "White Paper" on TIAA Traditional    TIAA Top

Can I lose money in TIAA Traditional?
Your money in TIAA Traditional is only as safe as the insurance company involved, TIAA.  But that is extremely safe.  It's not as safe as a treasury bond, but it's much safer than most corporate bonds.  And unlike a bond or a bond fund, the value of your account is guaranteed (by TIAA, not by the government) not to go ever go down. There are only three insurance companies rated "A++" by A.M. Best, and one of them is TIAA.  There are two huge factors supporting this guarantee.  The most important is that TIAA is a well-run insurance company with almost 100 years of experience in retirement savings plans.  For example, they held virtually no risky mortgage bonds by the time the 2007 credit crisis hit.  Secondly, they have a contract with you that says that not only will your account never decrease in value, but they promise you will never earn less than 3% interest while you are accumulating funds in a retirement account.

I could list other favorable factors, like the fact that insurance companies are more closely regulated than, say, corporations that issue bonds.  But I should also admit that there have been insurance company failures in my lifetime.  The annuity owners at Mutual Benefit Life had to wait up to seven years to get their money back.  And it has been explained to me on a newsboard that TIAA does not participate in the type of state-run insurance company guarantee fund that assessed its member to make the Mutual Benefit Life annuity customers whole. But I'll say it again: TIAA is an extremely well-run and safe insurance company!

Note that when you "lose money" in a bond fund because general interest rates increase (which is what will always happen), no one has cheated you.  So "lose" in the question can mean more than one thing.  And if you lose purchasing power in your old age because of inflation, no one stole from you either.  But many investors "sleep better" with a portion of their portfolio in very stable investments.  Another way to look at it is that when the stock market is down, your total dollars in your TIAA-CREF account will be "supported" by your TIAA Traditional amount that has not gone down.  This may help you avoid a rash, unwise decision like selling your equity account units.   Read more...   TIAA Top
What is the TIAA Real Estate Account?

In 1995, TIAA-CREF created an entirely new investment option for Participants.  Unlike REIT Mutual Funds (which almost exclusively buy shares of corporations organized as Real Estate Investment Trusts), the TIAA Real Estate Account (REA) invests directly in real estate, mortgages, and real estate joint ventures.  On December 31, 2007, the REA held 111 real estate property investments, including parts of 12 joint ventures. This was about 78% of the account's portfolio.  2.2% of the account was REIT stocks, 1.7% real estate limited partnerships,  9.2% commercial paper, 2.2% CDs, 0.2% each in variable notes and banker's acceptances, and 5.8% in government agency bonds.  (None of these percentages are fixed policies of the account.)

Note that the account should not be fully invested in real estate, because then it would not have any liquid assets to pay out to Participants who sell their shares.  In fact, the account has complex arrangements not needed by mutual funds that buy marketable securities, in order to guarantee liquidity and to value real estate that has not been "sold" in some time.  It's also possible for REA investments to be "leveraged", in the way that a home buyer puts down less than the value of a house, but borrows enough to pay the full purchase price to the seller.

The REA is a Separate Account of TIAA, the insurance company.  That means that its assets are not mixed in with the General Account that backs the operations of the company (and the TIAA Traditional Account.)  That means, as you would expect, that it works similarly to a mutual fund.  If the value of the real estate changes, it affects shareholders, but does not affect TIAA. Read TIAA-CREF PDF File on the REA  TIAA Top
Why isn't the TIAA Real Estate Account like a R.E.I.T. mutual fund?

The vast majority of ordinary mutual funds described as "real estate funds" actually buy the shares of companies that buy, sell, lease, and develop real estate, most of them organized as Real Estate Investment Trusts, or REITs.  Those share prices are set in the daily auction market that is a stock exchange.  Their value involves factors in addition to what the real estate they own is worth.  These include the perceived quality of the management, the amount of debt the company has, and general sentiment in the stock market, to name just a few factors.

Although it often also owns REIT shares and other securities, the vast majority of the assets of the TIAA Real Estate Account are physical real estate and portions of jointly-owned real estate.  At the end of 2007, that comprised about 78% of the Account.  Regardless of the form of ownership, it can be difficult to value a piece of real estate. The prospectus suggests that the account's holdings are reviewed periodically (monthly?) and formally appraised (quarterly? annually?) But this could very well produce a "smoothing" effect, very different from the daily valuation we're used to in stock mutual funds.

But think about real estate in general.  If you "knew" how much your own home "was worth" last week, how meaningful is it to say that it has a higher or lower value this week? TIAA Top
Why can't I transfer money out of my TIAA Traditional account?

Until about 1989, there was no way to take money out of TIAA Traditional except by taking an annuity. Today, you can either transfer the money with ten annual payments (from RA, GRA & RC contracts), or immediately (from SRA, GSRA, RCP, IRA & Keogh accounts.)  The accounts with restrictions on transferring or withdrawing the money have typically earned from 0.5% to 1.0% more interest that the account types that allow immediate access.  That permits TIAA to buy longer-term investments (that usually pay higher rates), and reduces the need for cash on hand, allowing less-liquid assets like direct real estate and mortgages to be bought for the TIAA General Account.  You may dislike the rule, but you do get something in exchange for the restriction.  Read more ... . TIAA Top
  What is a Transfer Payout Annuity / TPA ?

TPAs were created when TIAA-CREF was finally forced to permit withdrawals from TIAA Traditional before retirement.  (See answer just above.)  If you're taking TIAA Traditional money out of an RA, GRA, or RC contract, you'll have accept ten roughly equal payments, each one year apart.  This adds up to nine years and a day to get all your money (or whatever portion you chose to withdraw) out of TIAA Traditional.  In an IRA account, for example, no TPA is necessary.  You just make a transaction request, and it's done at the close of business that day.  TPA's can happen within a tax deferred account-We're not speaking only about getting your hands on the money and paying income taxes on it.  Read more (.PDF File from TIAA-CREF) . TIAA Top

 Should I swap between TIAA Traditional and the CREF Money Market Account?

This question might refer to people who used to scan the bank CD rates in the Sunday paper, seeking the highest rate for their next ultra-safe investment term.  If they have a GSRA or IRA account at TIAA-CREF, they are allowed to move TIAA Traditional money to CREF Money Market (or anywhere else) and back, depending on where today's reported yield is higher. Note that TIAA-CREF can create more restrictive rules if they want to.

First of all, you'd better be sure just how many transfers you're allowed to make in a month or quarter.  All companies, Vanguard included, place transfer restrictions on everything except straight Money Market Accounts.  You can have your exchange privileges suspended for violating the current rules.

Second, this is chasing yield.  It's not likely to make the difference between retiring rich and retiring poor.  You might better spend your time researching the more complicated (and likely, inflation-resistant) investment options that you don't use because you don't understand them, or are afraid of.

Finally, you may not know that if you eventually decide to annuitize some or all of your TIAA Traditional accumulation, you might very well get a higher payout if you leave your investment alone.  Look at the current interest rate table for TIAA Traditional.  The day I composed this page, it ended with this:

Payout Stage Interest Rates for Lifetime Annuities Issued During June 2008
For Benefits Arising From: Interest Rates
2003 - 2008 vintages 5.25%
1992-2002 vintages 6.00
Pre-1992 vintages 8.50
This is a compelling argument for leaving your TIAA Traditional accumulation alone, assuming that you are happy with your overall asset allocation, at your annual rebalancing.  You don't have to decide until you retire, whether or not to annuitize. Do not turn up your nose at an annuity until you see how much money you have at your disposal the day you retire!  TIAA Top

 Should I annuitize my TIAA-CREF accounts when I retire?

This question is far too important to decide based entirely on internet advice.  But in general, the less money an individual (or a couple) has at retirement, the more likely it is that they should annuitize some or all of their nest egg. But it also depends of issues like their health and whether their children need money from them. Many investors hate the idea because the insurance company might "win" a bet if they die soon and don't get all their money back in annuity payments.  The choice of a Guaranteed Period (which "costs" a reduction in payment amounts) is one way to reduce this worry. Note that in many cases, you may have the option of annuitizing less than your entire amount held at TIAA-CREF. You can always annuitize more later on in retirement. Read more at TIAA-CREF .  TIAA Top

 Do I "pay" anything to own TIAA Traditional?

Yes, but it's very hard to be sure how much.  Long ago, TIAA Traditional, like many other insurance company investment products, made deductions from your payroll payments called Premium Charges. They don't anymore. All of your salary reduction or fund transfer is put directly to work.  While it costs money to run the account, unlike in an SEC-registered mutual fund, they have no obligation to tell us how much. In any case, TIAA can make periodic changes in the interest payments to be made in the future, without consulting us. They are supposed to be operated in a not-for-profit manner, so we can hope they don't charge any more than they need to pay staff (and executive ...) salaries, overhead, and operating costs.

From time to time, you run across an estimate of their expenses expressed as if it were a mutual fund with an expense ratio. While it's not a mutual fund, the figure is useful since you can compare it with the cost to own a bond fund or a real estate limited partnership. However, neither of those products comes with a guarantee of 3% a year interest and no decrease in value!

I think those numbers have come about because of state school plans that absolutely require TIAA to provide an expense figure so their product can be compared in this way. In 2006, the University of Washington provided an estimate of 0.25%, but it doesn't have any background. TIAA Top



About CREF

What is CREF?

CREF stands for College Retirement Equities Fund.  After deciding in 1952 that a fixed-income based annuity was not going to be sufficient security for teachers retiring in the booming post-war economy, TIAA established a second company.  CREF is a New York State Type B Not-For-Profit corporation.  From 1952 to 1988, their only product was the CREF Stock Account.  It's still available today.  On 05/31/2008, its annualized total return since 1952 is 10.41% .  They've added several additional accounts since 1988, which are all technically Variable Annuity Accounts.  But they function very much like mutual funds unless you chose to annuitize them after retiring. Hard as it is to believe today, in 1952 the idea of investing teacher's retirement money in stocks was quite controversial.  CREF Top

Is the CREF Stock Account a mutual fund?

Technically, no.  Because it was set up in 1952 to parallel the TIAA product that already existed, it's a variable annuity.  However, it is like a mutual fund in that you own a slice of a huge bundle of stocks, and a custody agent is paid to hold the stocks so that no one at CREF can abscond with them.  Unlike a mutual fund, it was designed to be converted to a stream of lifetime payments at the retirement date of the owner's chosing. The payments vary with the performance of the securities in the account.  Today, you are free to move or cash out your account, subject to your school's rules about moving to another investment company, and subject to paying income tax for money that was tax-deferred when you put it in.  Some transfer options are still available after you annuitize, although they are more complicated.

Until 1988, there was none of the SEC reporting that you're used to from mutual funds.  At that time, a coalition of faculty who didn't like being forced to annuitize their accounts, and of for-profit mutual funds that saw a great market that TIAA-CREF had all to itself, forced CREF to register with the SEC.  Since then, there have been standardized prospectuses and annual reports on the CREF variable annuities. For example, their reported "Total Return" figures are comparable between CREF products and other SEC-regulated funds. CREF Top

 Are variable annuities a bad type of investment?
You may have read about high-cost variable annuities being sold to investors (particularly those already retired) for whom they are inappropriate. These typically involve commissioned brokers and customers who are likely to need their money soon enough to pay "surrender charges" for withdrawals within 8 years. These products have nothing to do with TIAA Traditional or the CREF variable annuities.  The vast majority of variable annuities are more expensive than anything TIAA-CREF offers. Since the TIAA-CREF variable annuities have costs comparable to mutual funds, there's no reason to reject them simply because they are structured differently. So the often-cited truism that a tax-deferred account shouldn't hold variable annuities (which are typically tax-deferred themselves) does not apply.  The TIAA-CREF retirement annuities don't have surrender charges for early withdrawals or exchanges.

It is true that it costs a little more to run an annuity than it does to run a mutual fund. And often annuities inside 401 and 403 plans have lower charges than "retail" annuities available to anyone. (Let's not get into the fact that lots of mutual fund companies charge you a lot more than it costs them to run the mutual fund!)  For example, the Fidelity web site suggests that their annuity products (Note: these are not restricted to retirement accounts, so they are not completely comparable to TIAA-CREF) cost about 0.25% in addition to the underlying fund costs.  In July, 2008, Vanguard listed the following expenses for their variable annuities:

Annual administrative fee 0.10%
Annual mortality and expense risk fee 0.195%
Management fees for the 15 portfolios range from 0.14% to 0.45%
Optional guaranteed return of premium death benefit, or... 0.05%
Optional annual step-up death benefit option 0.12%
(Those last two are not available for CREF retirement products.)

In other words, while Vanguard's broadest index Mutual Funds charge 0.15% or less, Vanguard's identical Variable Annuity funds cost 0.40% to 0.60%, depending on whether the death benefit has a guarantee. The CREF funds do not offer a guarantee, but only the current value when sold by the estate.

It's unusual that at TIAA-CREF, the Mortality and Expense Risk Fees have always been close to zero.  That doesn't mean that we get something for nothing.  Rather, the way the annuity payouts are arranged, we bear those risks directly, without buying promises on them as in the table above.  In other words, they can (and do) raise the expense ratio any time they need to (Note that they are supposed to be "at cost" charges...), and that the annuity payouts depend, in a small way, on the death rates of all of the annuitants. There have also been times (but not recently) when the expense ratios have gone down!

What happens to dividends and capital gains in CREF accounts?
Until January, 1987, the CREF Stock Account distributed realized capital gains and dividends to shareholders, using them to buy additional shares of the account.  (Actually, "Accumulation Units".)  This is how almost all mutual funds in the United States continue to work today.  In 1987, the CREF annuity units were converted to "Total Return Units". Their value is increased by the same amount of money, but the gains and income are not distributed as additional units.  There is no financial difference to the owners, but I suspect it reduces operating expenses.  All the CREF Accounts operate this way, including the CREF Money Market Account, which is unusual for a Money Market account.  The TIAA-CREF Institutional Mutual Funds distribute gains and income just like other mutual funds.

This makes it very hard to compare the performance of the CREF Variable Annuity Accounts to regular mutual funds they compete with.  The fact is, when you look at any mutual fund chart on Yahoo! Finance or anywhere else, it's impossible to be sure when and whether the reporting service has adjusted the graph points to reflect that a shareholder on (say ...) January 1 has just as many dollars as he/she did on December 31, but the share price has been lowered to reflect the distributions. CREF Top

How can I read the S.E.C. filings by CREF?

There are at least two places to read these important documents, particularly the Prospectus and the Annual Report.

You can always find those two documents, along with the Statement of Additional Information, on the TIAA-CREF website.  The home page has a blue bar near the very bottom.  One of the links on the blue bar says "Prospectuses".  If you click on that link, you'll be able to view a variety of files.  To see the Annual Report, find the link on the Prospectuses page that says "Annual Reports and Financial Statements".  That page has a link to the CREF Annual Report.

To see all these and more, you can go to the SEC's own website, which has been compiling reports by regulated investment companies for many years (but not back to before the Internet.  For that, you have to go to the SEC office or use a pay-database (which your employer may well subscribe to ...) like LEXIS.  Frankly, it takes some experience to find what you want on the SEC site, but they do have lots of tutorial pages that don't require a law degree.  The main page for CREF documents begins at this LINK, with the documents filed in reverse chronological order, page after page.  The SEC has recently implemented RSS (Really Simple Syndication) feeds that you may be able to have sent to your computer.  Note that there's an RSS button on the CREF page linked two sentences back.  CREF Top

 Why can't I find the CREF Account share values in the newspaper?

The CREF accounts, which have names like CREF Stock Account or CREF Inflation-Linked Bond Account, are, and always have been variable annuities.  They were set up that way (starting in 1952 with the CREF Stock Account) because TIAA (since 1918) had always provided an annuity product for educator retirement plans.  You'll have to take my word for it, but in 1952, the use of equities as a retirement investment was quite controversial. One of the ways conservative schools and nervous faculty were "sold" on the idea was the annuity structure and the stringent restrictions on withdrawal (which no longer exist today for the CREF Accounts.)

Because they are not mutual funds which have NASD ticker symbols, (although they function like them in many ways), they only appear in a tiny number of specialized publications that cover annuity products. I once saw a paperbound "Variable Annuities Report" from Morningstar in a public library, but not recently. To make matters more confusing, the Securities and Exchange Commission does regulate the CREF accounts, but they still do not appear in the newspaper or online mutual fund listings.  CREF Top

  How can I see prices/graphs of the performance of CREF accounts?

1)  Although there are occasional delays in posting the results, TIAA-CREF posts daily prices for the variable annuities on their website.  This section of the home page is headed "Fund Watch".  It has a link that lets you customize the funds listed, so you can list only the ones you own if you prefer.  This is a very basic listing.

2)  To see CREF's own charts, go to the "Performance" drop-down box on the TIAA-CREF website (same link as just above.)  Use the box to chose the first option, "Retirement Investments and IRAs".  Click the "Go" button right there.  On the right-hand side of the resulting page, there's a section headed "Tools and Information".  Click on the blue link that says "Custom Graphing".  Make your choices, click "Submit", and the graphs will appear.

3)  CREF accounts are not generally available on third-party websites. Because TIAA-CREF used to use BigCharts as a data provider, there used to be two exceptions. These were Marketwatch.com, and BigCharts.com .  I'm listing the special symbols they used below, but they no longer work to provide current data.  One caution: If you use these charts to compare CREF accounts with conventional mutual funds, you will be misled, especially if you chart more than three months.  That's because the CREF accounts have Total Return Values, and mutual funds do not.  This list is in the form of links to BigCharts that should display a ten-year graph of the account you click on.  Note that there is one underscore ("_") character after each use of the letters "TC".  You can't see this if your browser underlines hot links. It appears to me that the new data provider, http://www.ftinteractivedata.com/index.shtml uses the same metasymbols.

CREF Stock Account - TC_1001   (i.e. TC_1001)
CREF Global Equities Account - TC_1002
CREF Growth Account - TC_1002
CREF Equity Index Account - TC_1004
CREF Social Choice Account - TC_1005
CREF Bond Market Account - TC_1006
CREF Inflation-Linked Bond Account - TC_1007
CREF Money Market Account - TC_1008
TIAA Real Estate Account - TC_1009                                      CREF Top

 What can I use as a proxy for CREF Account shares on my computer?

Note that this question is not about fund symbols like the question above.  Since the CREF accounts are not mutual funds, Participants who want to use a portfolio analysis tool need a non-annuity account that has very similar holdings to their CREF accounts.  This requires calculating a different number of shares (to account for the pricing of the proxy fund), and keeping the figure up to date as your actual CREF account values (hopefully) increase each year.

Let me say that again: These are personal opinions about ways to roughly replicate CREF accounts with publicly available funds.  They are absolutely not perfect duplicates.  You should recalculate (i.e. force into 100% accuracy) your proxy holdings at least once a year.  This is the least precise and most subjective material on this page!

CREF Stock Account: Special Case - This requires multiple proxies.  Here are two reasonable schemes, and two ETFs to consider if you want to actually buy something cheaper to own than CREF Stock.  Read more ...
1)  73% IWV, 22% VEU, 5% VWO    (Three ETF Stocks)
2)  73% IWV, 17% VEU, 5% VWO,  5% SCZ    (Four ETF Stocks)
3)  VV  (Much less accurate [no international] but very cheap to own)
4)  SPY  (Much less accurate [no international] but very cheap to own)
CREF Global Equities Account:  ACWI
CREF Growth Account:  IWF
CREF Equity Index Account:  (Russell 3000)  IWV or TIQRX
CREF Social Choice Account:  Special Case - This requires multiple proxies.
47% IWV, 13% VEU, 40% AGG
CREF Bond Market Account:  TIDRX  
CREF Inflation-Linked Bond Account:  TIKRX
CREF Money Market Account:  $Cash or your tool's meta-symbol for cash holdings.
TIAA Real Estate Account:  No suitable fund symbol available.That's because this account holds mostly direct real estate, and many real-estate related products that are not publicy traded.  It has only a tiny amount of REIT stocks.  CREF Top

 Do I "pay" anything to own a CREF Account?
 
You certainly do. But many mutual fund investors and users of other retirement products have no idea that they are paying a small percentage of their investment, every day, to the company that runs the account for them. Just like a mutual fund, the CREF variable annuity accounts deduct about 1/365th of the expected annual cost for running the account (for example, 0.50%, or one half of one percent) each day. What's a little different from most mutual funds is that every quarter, CREF adjusts our payments to reflect any increase or decrease in the actual expenses from what was expected.  And they pay "at cost" charges to their service provider subsidiaries at TIAA, without the profit a mutual fund management company normally charges.

Having said that, I should note that I'm very unhappy at how much the CREF expense ratios have increased in the last 20 years.  But although they are much higher than the Vanguard S&P 500 Index Fund (just to pick an exceptionally cheap competitor), they can't be said to be unreasonable. CREF Top

About TIAA-CREF General Questions

 What was "The Participant"?
As you may know, the term "Participant" is used to describe clients of TIAA-CREF.  It's a much nicer term than "shareholder" or "customer".  I complained at a CREF Annual Meeting about a letter that was addressed to Clients, rather than Participants.  But once they offered Retail Mutual Funds (and as the annuity situation changed), they began to have customers who were not bound to them for life. Indeed, the company has much less of the warm, fuzzy "Ma Bell" aura it had for so long.

From 1972 to 2003, TIAA-CREF sent Participants a (roughly, quarterly) publication called "The Participant", with news and articles on topics of interest.  At first it was a multifolded thin-paper affair, by the end (during the Herbert Allison years), it was a staple-bound booklet with a coated-paper cover.  The articles varied from fascinating to badly-written, from insightful to self-serving.  For an example of an article (written by the President and CEO at the time, no less), see the FAQ for "What is/was a '50-50' investment option?" just below. TIAA-CREF Top

 What is/was a "50-50" investment option?

From 1952 to 1988, there were only two choices for Participants to invest their savings at TIAA-CREF, the CREF Stock Account and TIAA Traditional.  For most of that time span, you were not permitted (!) to put 100% of your contributions into CREF Stock.  To greatly over-summarize, investing in equities for retirement was considered inappropriate by many in 1952, including universities counseling TIAA-CREF back then.  Once it became clear that fixed-income investing did not provide (for example) enough protection against inflation, many investors happily used CREF Stock Account as part of their investing strategy.  I'll answer the question by quoting an article John Biggs, then President and CEO, wrote for "The Participant" magazine in 1995:

Are 50/50 Allocations Still a Smart Choice?

... Clearly, if we could be blessed with the foresight then comparable to our hindsight now, there would have been better allocations than 50/50. While we're at it, we could carry this to an even greater extreme and argue that judicious changes between CREF Stock and CREF Money Market would have produced a still better result. Some participants do try to capture those results and even pay advisors substantial fees to try to capture them. Investment experts disagree about a lot of things, but one general proposition that almost all would subscribe to is that frequent reallocation based on predicting future stock market swings and interest rate changes is extraordinarily hard to do, and the vast majority of investment programs that play that game end up losing money compared with ones that stay with a simple fixed strategy.

...  But classic 50/50 may be an all-weather solution and historically a good one after all-12.4 percent a year over the last twenty years is a great result. Most astute investors today would take a 12.4 percent return if it could be guaranteed for the next five, ten, or twenty years. But, of course, no one can guarantee it.  TIAA-CREF Top

  What options do I have for investing in my account?

I wish I could give you a definitive answer.  The single greatest factor in the answer to your question is the list selected by your employer when they signed their contract with TIAA-CREF.  There's little doubt that today, TIAA-CREF would like as many options as possible to be available.  But many, many employers, either through inertia or paternalistic concern for their employees' financial health, place substantial restrictions on which investment products you can select, and what you can do with your accumulations.

Virtually all Participants can chose TIAA Traditional, any of the CREF variable annuities, and (since the state of California finally accepted it) TIAA Real Estate Account.  TIAA-CREF, starting with their "Open Plan Solution", has been pressing schools to offer all of the Institutional Mutual Funds, and even a few funds from outside TIAA-CREF.

I've found that the best way to quickly answer your question is for you to log onto the TIAA-CREF web site (I mean after registering for online secure access, with a username and a password) and select the tab for making an exchange.  Go far enough to get to the screen with the choices for your new selection.  Don't worry, you're going to press "Cancel" instead of actually making an exchange.  But this screen should show a list of what you could buy.  TIAA-CREF Top

 How do I decide how to invest my contributions?

Millions of web and newsboard pages try, without success, to answer this question.  You may be disappointed with my answer.  But it all comes down to "How much do I need?", "How much do I have?", "How long do I have to get there?", and "How much risk can I/do I want to/must I take?".

How much do I need?  This depends on whether you have children, your health, your family longevity, how you live now, and how you want to live in retirement.  Lots of web sites have calculators (Note 1), but you need to know what your family income is today, how much you spend (really spend, not imagine you spend), and your federal and state marginal tax rates today. (Note 2)  Don't forget upcoming college expenses or parent health costs. Try typing "how long will I live?" into your favorite search engine.

How much do I have?  I mention this because you have to decide if you're going to redeploy (i.e. reallocate investment techniques) money you have, and you have to decide how to allocate the money your employer is sending to TIAA-CREF each time you get a paycheck.  Those decisions are related.  If you're afraid of moving what you have, set your contributions to work towards the allocation you know you should have now, while you work up the nerve to adjust your current holdings sometime later. (Note 3)

How long do I have to get there?  Many people are horrified when a planning tool tells them that (for example) they need to save 20% of their wages for the rest of their career.  There are factors that can't be "seen" clearly on a general model.  Some (very tough) questions to think about are: Is our health good?  How long are we likely to live? Do my children really need an inheritance from me? Am I willing to "die broke" in exchange for "living better"? Can I change my spending habits? Do I like my job?

Note 1: Retirement Need/Goal Calculators

Note 2: Retirement Income Calculators

Note 3: Asset Allocation / Risk Tolerance Calculators
 TIAA-CREF Top

 Am I stuck with TIAA-CREF as my retirement investment at work?

This question can mean several things.  If your employer only contracts with TIAA-CREF for retirement savings plans, yes, you're stuck with the single choice as long as you still work there.  Can you and your colleagues agitate for more choices?

If your employer offers more than one company for retirement savings, you should be able to force your current plan provider to do a trustee-to-trustee transfer.  It's usually helpful to get guidance from the plan you're moving to, because they have an incentive to collect the funds for you.  But it's good to find out if the company losing the money can drag its feet because you haven't provided (for example) a form they require.  See the 403bWise site.  You might as well bite the bullet and call the TIAA-CREF service number, because they don't post forms online for taking your money elsewhere. They're going to try to retain you, but you might as well ask how you can speed up the transfer.

If you leave your job at the TIAA-CREF-affiliated employer you're now at, it's just remotely possible that your employer was conservative (or perhaps, dumb) enough to put in the contract that you can't get money out of the plan until you retire.  But that's very rare today.  Be aware that you might be pressured to prove, some years after leaving, that you actually terminated your employment, when you roll over your TIAA-CREF money to another provider.  So save a termination letter that doesn't have too much confidential information in it, in the hope that it might be enough to prove you don't work there anymore.

Sometimes a new employer will let you roll over a 403(b) or 401 account from your previous job into the new plan you're getting into. This would interest you if the new plan has really good, inexpensive investment options.  But many people prefer the freedom and flexibility of rolling over into an IRA that's independent of any employer.  TIAA-CREF Top

 Can I transfer my TIAA-CREF account to Fidelity/Vanguard/another company?

Please read the answer just above.  If you are still employed at the company or school that gave you the TIAA-CREF plan, you probably cannot.  If you've terminated employment, you should be able to transfer your money.  You can expect TIAA-CREF to everything they can to hold onto you money.  TIAA-CREF Top

 What kind of TIAA-CREF account do I have?

Method 1: Get out your last quarterly statement that came in the mail, or print it out if you get it online.  Turn to the second or third page, to the section headed with the bold-faced "account values".  For each pair of (TIAA and CREF) accounts you have, you'll find a subheading like Retirement Annuities, Group Retirement Annuities, or Traditional IRAs & Mutual Funds .  In each case, the initials of the heading are your type of account: RA, GRA, GSRA, IRA.

Method 2:  Log on to your online TIAA-CREF account.  After you get to the page that presents your grand total My Portfolio, click on the tab that shows your funds by account, Plan Balances.  Each of the accounts has a heading in capital, boldfaced letters.  Here's a made-up example: ANY COLLEGE 403(B) TDA PLAN | GSRA L123456 .  This account is a GSRA .  L123456 is one of your two account numbers, but you can't tell if it's the TIAA account or the CREF account.  There is no danger of your accidentally making a transaction because these web pages I've mentioned don't have transaction buttons or data entry fields on them.

Method 3:  Call the counseling center at 1 800 842-2776. This number is listed under Retirement Plans on the Contact Us web page.  You can find that link at the top of the TIAA-CREF home page. TIAA-CREF Top

 Does TIAA-CREF have an annual meeting?

TIAA does not have an annual meeting. In fact, the annual trustee ballot you get is technically only a recommendation to the Board of Overseers on whom to vote for. CREF does have an annual meeting, where you can ask questions directly of management.  In recent years, it has been held in mid-July in New York City, but it has also been in Charlotte, NC and Denver, CO, where the company has very large operations.  Frankly, I think they moved it to July so vacations would decrease attendance. But they could argue that academics are more free to travel in the summer. You get a proxy ballot in the mail, just like you do for a publicly-owned company that you have stock in. Herbert Allison has stated that questions about all parts of the company (like TIAA) are appropriate at the CREF meeting, but he's not the President and CEO anymore.

 Is TIAA-CREF "different" from what it used to be?

Yes, but it may not be a completely bad thing.  For example, if you read the last IRS Form 990 from CREF (they haven't had to file it anymore since 1997), you'll see that the Chairman, President, and CEO John H. Biggs, was paid a salary of $2,702,848. That doesn't make Herbert Allison's pay seem so out-of-line, does it?

The landscape of retirement investing changed tremendously in the last two decades of the 20th century.  Ask yourself, would you take TIAA-CREF as your retirement plan today, if the only two choices were still TIAA Traditional and CREF Stock?  When they added plans in 1987, they were also forced to let people take money out of both plans (!) and the competition with all the other financial services companies began.  Until then, TIAA-CREF had virtually the entire private education and research business to itself.

In fact, their first competitive products, some retail mutual funds, were badly set up.  And they took far too many years to move their marketing and computer systems into modern times. Talk to the two Presidents before Allison, John Biggs and Clifton Wharton. TIAA-CREF is still taking a well-deserved beating on both scores today. But they had to move forward, or they would have eventually become an even higher-cost, obscure corner of the financial services industry.  Have you ever heard of Mutual of America?  They're the other company closest to TIAA-CREF's business model.  (They were my retirement plan at one not-for-profit I used to work for.  I hate to slam them, because they've done lots of good. But they can't even compete with TIAA-CREF.)

I wish they were still a little-known, angelic protector, hovering over the academic community.  But that's not the way the investing world works today. It's almost illegal to offer only two investment vehicles today!





Copyright © 2009 Timothy H. Buchman
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 		Published: June 10, 2008
Modified: August 18, 2009