It's an NBC article. The writer of the article is Gretchen Morgenson, the Pulitzer prize winner and longtime writer of Market Watch for the NYT. She was later at the Wall Street Journal and is now the senior financial reporter for NBC News.I have no comment on the assertion about profit margin on TIAA Traditional, but this is not a "real" news organization like the NY Times, which has research staff, and so on.
The article only stated that the former trustee of the Kentucky Retirement Systems says that the industry consensus is that TIAA makes about 1.2% on Traditional. I don't know where he got that. He didn't say it was a computed figure. Perhaps it was notional, by estimating performance of the assumed underlying investments and the promised returns? I don't know.Most state Insurance Departments (NY State in this case) allow insurers to keep vast amounts of important data as "proprietary secrets", so it is not believable that 1.2% is a realistic, accurate, computed figure.
Yeah. In today's modern age of transparency regarding defined benfit pensions, and defined contribution accounts, TIAA's old style insurance approach to retirement is frustrating. It's not that it's evil. But it's way more complicated than anything else I own. Traditional has all the different contract types, with all the different liquidities. There is the guaranteed rate. And all the vintages of money depending on when you contributed the money, each with their own rate of return. And all of the numbers change over time. Truly, I thank you crefwatch, for explaining all of the details of this over the years. It's not easy.TIAA Traditional is NOT a fractional ownership product like a mutual fund or an ETF. Customers own nothing. It's just a contract with a "big evil insurance company" (Ironica typeface.)
And they aren't transparent. Going in, I was either never told about 9-year withdrawal requirements or it was glossed over so quickly that I missed it. I'm sure the wording was always in the contract, so it's my fault for missing it.
Being an insurance-like company, they don't ever even explain what they are investing in to back the returns they are committing to. It's very 20th century, if not 19th century sounding. Nothing wrong or evil, but it's just not how I like investing in 2024.
Learning all of this late, I've stopped investing in TIAA products within my TIAA retirement plan, which does also offer Vanguard index funds. Those are much easier to manage and understand, and I presume I will be able to roll all of that over to Vanguard or Schwab or whatever when I retire, where our seven TIAA accounts can maybe be merged into one IRA and one Roth IRA for each of my spouse and me. Because we don't want seven accounts when we're 85.
Statistics: Posted by MoreTaxes — Sat Oct 26, 2024 1:24 am — Replies 35 — Views 1754