TIAA Traditional: Shedding Light on it's Inception and Intended Purpose

November 01, 2023

Hello, HigherEd retirees, and welcome back to the HigherEd Retire Blog, your dedicated source for unraveling the complexities of higher education retirement plans, with a special emphasis on TIAA accounts. Today, we're delving into the heart of TIAA Traditional, shedding light on its inception, purpose, and a crucial understanding that will guide you through this unique financial instrument.

Understanding TIAA Traditional's Philosophy:

As we navigate a rare high-interest-rate anomaly in the realm of TIAA, it's crucial to understand the core philosophy behind TIAA Traditional. Greg Shepard from S&A Financial Services provides insights into this distinctive retirement option, emphasizing its long-term nature.

  1. The Birth of TIAA Traditional: TIAA Traditional, conceived by the Teachers Insurance and Annuity Association, was designed with a fundamental goal – to offer individuals a fixed, long-term avenue for accumulating savings over time. Its inception was rooted in providing a stable financial vehicle, allowing participants to build wealth gradually. 


  1. Accumulation and Bonuses: One of the unique features of TIAA Traditional lies in its mechanism of rewarding participants with TIAA loyalty bonuses over time. The structure encourages a patient, long-term approach, as these bonuses contribute to the growth of funds, aligning with the overarching goal of long-term wealth accumulation.



  1. Conversion to TIAA Lifetime Income Annuity: The beauty of TIAA Traditional becomes apparent when participants approach retirement. The accumulated funds can be converted into lifetime income annuity payments. This strategic approach ensures financial security during retirement, offering a steady stream of income.



  1. The Catch: While the current TIAA Traditional high-interest rates may seem tempting for short-term gains, it's essential to recognize that TIAA Traditional was not initially designed for quick returns. I would stress the importance of aligning your expectations with the foundational intent of TIAA Traditional.


Navigating Illiquid Contracts:

Confusion often arises, particularly with illiquid contracts, where participants may not fully grasp the implications of their choices. It's crucial to comprehend that the key to a successful TIAA Traditional strategy is aligning expectations with its intended purpose.

  1. Long-Term Play: When entering TIAA Traditional, think of it as a long-term play, a strategy to guarantee your funds over an extended period. This aligns with the intended purpose of converting these funds into lifetime income annuity options upon retirement.


  1. Foundational Intent: While TIAA offers various options, understanding the foundational intent of TIAA Traditional is paramount. It's about securing your financial future through a patient, well-thought-out approach.


As we approach the year's end, it's essential to ensure you're on the right track for a secure financial future. TIAA Traditional, with its unique philosophy and long-term benefits, can play a significant role in your retirement strategy. If you have questions or comments, reach out – I’m here to assist you in making informed decisions about your retirement plans.

Greg Shepard here from S&A Financial Services, take care.

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.