TIAA Strategy-Age Discrepancy Between Spouses

January 15, 2024

Greetings, HigherEd retirees! Greg Shepard here, your trusted advisor in navigating the intricacies of higher education retirement plans, with a special emphasis on TIAA accounts. Today, I bring you a groundbreaking strategy tailored for couples facing a significant age difference. Welcome to the HigherEd Retire Blog, where we're dedicated to empowering you with insights that can transform your retirement journey.

The Age-Discrepant Scenario:

In a recent scenario, we encountered a soon-to-be retiree holding a substantial $700,000+ in TIAA Traditional within a TIAA Traditional illiquid contract. What set this situation apart was the nine-year age difference between the participant and his spouse. This unique dynamic opened the door to a game-changing strategy that addressed both liquidity concerns and estate planning objectives.

The Traditional Challenge:

Typically, when facing retirement and possessing TIAA Traditional funds, retirees consider the lifetime income annuity option. However, in this case, the age difference sparked a need for a more tailored approach that would better align with the couple's specific goals.

Introducing the TIAA Traditional 10-Year TPA:

The game-changer in this scenario was the implementation of the 10-year Transfer Payout Annuity (TPA). Unlike the traditional lifetime income annuity, the 10-year TPA offers a more flexible and dynamic solution. By choosing this option, the participant could receive annual payments over a period of nine years, directing these payments into a Rollover IRA.

 Why the Age Difference Matters:

 The age difference between spouses played a pivotal role in making the 10-year TPA an attractive choice. Here's why:

 

  1. Enhanced Liquidity: The 10-year TPA provided the couple with increased liquidity during the payout period. Unlike the lifetime income annuity, which locks in funds for the lifetime of the participant, the 10-year TPA allows for more immediate access to the funds.

  

  1. Estate Planning Benefits: The staggered payouts over nine years offer significant advantages in estate planning. This strategy allows for greater control over how the assets are distributed, potentially optimizing the inheritance for heirs beyond the surviving spouse.

Understanding the Strategy:

It's essential to clarify that this strategy isn't a one-size-fits-all solution. The decision to opt for the 10-year TPA depends on various factors, including the age difference between spouses, individual financial goals, and estate planning priorities.

 This video isn't investment advice, but rather an educational tool to empower you with knowledge about TIAA Traditional rules and alternative extraction methods. Before implementing any strategy, make sure you thoroughly understand the nuances of your retirement plan. If applicable, explore options like the 10-year TPA and consult with a financial advisor to determine the best approach for your unique situation.

 Your Questions and Comments:

 If this scenario resonates with your situation or if you have questions about your TIAA accounts, feel free to contact me. Your unique circumstance might unveil opportunities for tailored strategies, and I'm here to help you navigate them.

 Conclusion:

In conclusion, the age difference between spouses can unlock innovative strategies within TIAA accounts. The 10-year TPA serves as a game-changing alternative, providing enhanced liquidity and estate planning benefits. As you contemplate your retirement strategy, remember that education and understanding are key.

 Greg Shepard, signing off from S&A Financial Services. Take care, and until next time!

S&A Financial Services, Inc. 

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*Disclosure* S&A Financial Services, Inc. is a registered investment advisor. Content presented is for informational purposes only and should not be considered as investment advice or as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Always consult with your tax advisor or attorney regarding your specific situation.