Similar to our core mutual funds, each of the core annuities offers you the ability to invest in a diverse portfolio. The difference is that, when you retire, you have the option of immediately converting your balance to an annuity that will provide a stream of income, guaranteed for life.
Why can this be an important consideration? Ensuring you have income to last your lifetime is a key reason you save for retirement. In fact, the goal of saving for retirement isn’t to build wealth for its own sake; it’s to replace the income you were earning when you were working. Boston University is offering four annuity accounts in our restructured retirement plan:
Type of Annuity
|N/A||TIAA Traditional Annuity||Guaranteed|
|Short Term||CREF Money Market||Variable|
|Bond-Inflation Protected||CREF Inflation-Linked Bond||Variable|
|Domestic – Large Blend||CREF Stock||Variable|
As the chart indicates, you can choose from two types of annuities.
- The TIAA Traditional Annuity is a guaranteed annuity account backed by TIAA’s claims-paying ability. It guarantees your principal and a contractually specified minimum interest rate, plus it offers the opportunity for additional amounts in excess of this guaranteed rate. These additional amounts are declared on a year-by-year basis by the TIAA Board of Trustees. Additional amounts are not guaranteed for future years.
- The CREF accounts are variable annuities, which do not guarantee principal or interest. Your account balance can go up or down based on the underlying investments. But in exchange for taking on more risk, you have the potential to earn greater rewards.
In addition to the core annuities, all other investment options under the plan may be converted into an income annuity when you retire, providing a stream of income you can’t outlive. Keep in mind, the size of that income stream may be large or small depending on your account balance and your age at the time your account is converted.