I do not think that you need either of these funds:Working years left: 25-30, most likely in higher education.
Background: I started saving later than I should have. My retirement savings currently equal a year of my income: Vanguard Target Date 2050 funds in my Roth and rollover IRAs; and Fidelity index funds with my current employer’s 403b, approximating Vanguard’s target date AA, rebalanced quarterly. (No target date index funds are available from any of my current employer’s 403b vendors, alas.)
My current employer also has TIAA as a vendor, with “TIAA Traditional Annuity - Retirement Annuity”. However, I may be taking a new job later this year which offers “TIAA Traditional Annuity - Retirement Choice” instead.
I’ve been spending a couple days on this board and the wiki, trying to get a grip on the different flavors of TIAA Trad (as well as TIAA Real Estate QREARX, which seems equally unique, but less intrinsically compelling).
I like the simplicity of target date index funds; they resist tampering and second-guessing. If I predecease my spouse, who is bored by this stuff, simpler is better. However, as with my 403b at Fidelity, I’m capable of rebalancing without the temptation of market-timing.
Question: Are any of these assets—TIAA Trad RA, TIAA Trad RC, and TIAA Real Estate—worth the added complexity at this point?
- If so, then in what proportions? I’ve seen many threads indicate that TIAA Trad should function like bonds in one’s AA, either as a replacement or supplement to them. If I understand correctly, early contributions into TIAA Traditional are worth it for the vintage bonuses, and this is TIAA Trad’s most compelling and unique feature.
- And if this is so, then is it worth transferring my current employer’s 403b from Fidelity to TIAA, in order to get Traditional RA while I can, before potentially only having access to Traditional RC? I’m hesitant to dump my FXNAX bond index shares while they’re so low, but then again, it’s not very much money to begin with.
I confess that I only started considering this because of the potential job change inspiring me to poke around in both institutions’ retirement plan offerings. Previously, I wrote off TIAA Trad as too complex and illiquid. Now, I’m not so sure... Unfortunately, I have no one I can talk this over with to put me aright.
- If not, then I can wait for this itch to do something to pass.
- your bond fund will, over the long haul, proxy what TIAA Traditional does, without the added restrictions and uncertainties. Yes you will have bad years in bonds and 2022/23 was just horrible. But you will also have good years. Whereas w TIAA Trad as I understand it (I am not in the USA) you are somewhat dependent upon the financial health of the fund manager (TIAA-CREF) to maintain the guaranteed return? That's a big bet to take for the next 30 years or so.
- TIAA RE we've had many discussions down the years here. My conclusion is in the long run it will proxy the performance of a REIT index fund, but with far less apparent volatility. Given the issues regarding office & retail property valuations post Covid, I don't see a great need to own this fund. If you do or do not own it, it will not make or break your final portfolio value.
The main argument for real estate is that rents are linked to inflation, and so it should have a greater correlation with inflation than stocks as a whole. However that doesn't seem to have been true in recent times.
Basically you want to minimize costs, and have a very disciplined approach to continuing to invest, especially when the news is bad. If using the TIAA funds does not move you towards that goal, I would not worry about it too much.
Statistics: Posted by Valuethinker — Tue May 07, 2024 8:26 am — Replies 21 — Views 1957