Building on ninety years of helping to meet the financial needs of clients to and through retirement, TIAA-CREF today introduced the Lifecycle Retirement Income Fund, a new low-cost, well-diversified mutual fund that seeks high total return over time primarily through income, with a secondary emphasis on capital appreciation.
The Fund is intended for investors who are nearing retirement, are looking to roll over assets to an IRA from another tax-advantaged retirement plan, such as a 403(b) or 401(k), or investors already in retirement seeking the convenience and flexibility of a diversified income generating fund. The Fund’s annual net expense ratio (for the Retirement Class), 0.61% of net assets, is among the lowest in the financial services industry. i
“This new fund offers retirement investors what we believe is an optimal amount of growth without undue risk, and complements other funds and accounts as part of a well-diversified retirement portfolio,” said Scott C. Evans, Executive Vice President, Asset Management. “The Lifecycle Retirement Income Fund builds on TIAA-CREF’s innovations in investing for retirement including creating the first variable annuity in 1952, pioneering international equity investing in the early 1970s, and taking a leading role in creating the first inflation-protected bonds.”
A Convenient Retirement Income Option
The Lifecycle Retirement Income Fund is designed to help support investors’ capital preservation and income needs throughout retirement. The Fund, from which investors may withdraw assets at any time, complements guaranteed retirement income vehicles such as annuities or systemic withdrawals from an IRA or other account. Thus, the Fund offers investors the freedom to access their capital easily through a mutual fund investment, combined with the opportunity to draw a modest stream of income.
“TIAA-CREF’s unique advantages of choice, objectivity, personalized advice, commission-free products and servicesii , exceptional value and staying power continue to distinguish our service for individuals investing to and through retirement,” said Maliz Beams, executive vice president of Individual Client Services. “The Lifecycle Retirement Income Fund builds on these unique advantages to offer clients a convenient and easy-to-use option for income replacement in retirement.”
The Lifecycle Retirement Income Fund, along with other retirement income vehicles such as low-cost annuities that can provide guaranteed lifetime income, can enable individuals to create a foundation that balances income, preservation of capital and the flexibility to convert assets to cash as needed.
Optimal Asset Allocation, Objective Advice, No Sales Commissions and Value
The Lifecycle Retirement Income Fund, part of TIAA-CREF’s family of Lifecycle Funds, is a “fund of funds,” and primarily invests in Institutional Class shares of other TIAA-CREF funds (called “underlying funds”). The Fund is typically forty percent invested in underlying funds that invest in equity securities, like stocks, and sixty percent invested in underlying funds that invest in fixed-income securities, like bonds. This asset allocation is consistent with the final asset allocation of TIAA-CREF’s target date Lifecycle Funds and reflects the organization’s rigorous internal research and modeling, informed by academic and industry research, to ensure access to capital appreciation without undue risk. This asset mix continues to allow investors access to any appreciation in equity markets during retirement. The Lifecycle Retirement Income Fund’s asset allocation positions it as the most conservative option in the spectrum of Lifecycle Funds available.
TIAA-CREF currently provides 500,000 participants with a combined $10 billion in annual payments. TIAA-CREF also offers participants over 20 income options.
The organization’s retirement specialists receive no sales commissions as part of their total compensation. Instead, they are compensated through a salary plus incentive program that rewards client service excellence, rather than product promotion.
Fees on TIAA-CREF funds and accounts continue to rank in the lower half of financial industry expenses for mutual funds and variable annuities.i
Retirement plan clients that invest in the Lifecycle Retirement Income Fund also have access to the TIAA-CREF advice process, which is based on a consistent set of principles, including objectivity, transparency, a comprehensive approach, and a five-step consultative process.
“With our commission-free annuities, which can provide guaranteed lifetime incomeiii , and the TIAA-CREF Lifecycle Retirement Income Fund, we offer investors TIAA-CREF’s track record of performance, competitive feesi, and investment solutions focused on their individual retirement needs,” said Eric Jones, Senior Vice President of Individual Products.
Serving Investors’ Retirement Income Needs for 90 Years
In 2008 TIAA-CREF begins its 90th year of helping to meet the financial needs of investors who want income they can’t outlive.
In addition to the new Lifecycle Retirement Income Fund, investment offerings for investors seeking retirement income include the TIAA Traditional Annuity which guarantees (based on TIAA’s claims-paying ability) principal and a minimum annual 3% interest rate, plus any additional amounts as declared by the TIAA Board of Trustees, and the CREF Stock Account, a variable annuity that invests in a broadly diversified range of U.S. and foreign stocks.
TIAA-CREF has expanded its investment offerings to include a family of mutual funds, including the Lifecycle Funds, and also offers a unique opportunity to invest directly in commercial real estate properties through the TIAA Real Estate Account, a variable annuity which generates money for investors from rental income and appreciation of real estate investments.
TIAA-CREF offers a broad range of investment solutions based on life stage, including brokerage services, no-fee IRAsiv , annuities, life insurance, mutual funds and education savings.
“The Lifecycle Retirement Income Fund and the other Lifecycle Funds give our institutional clients another means to help their employees prepare for, transition to, and live in retirement,” said Nancy Heller, Senior Managing Director, Institutional Client Services. “The Lifecycle Retirement Income Fund adds a new dimension to TIAA-CREF’s lineup of retirement funds and accounts, and furthers our organization’s mission since 1918 to provide investors with financial security.”
TIAA is one of just three U.S. insurance companies to receive the highest rating from all major rating agencies, meaning the company has the claims-paying ability investors count on to get them through retirement.v
The TIAA-CREF Lifecycle Retirement Income Fund will be available in Institutional, Retirement and Retail share classes, subject to each class’s respective eligibility and availability. Individuals can buy the Fund directly through a TIAA-CREF IRA or non-retirement account. The Retirement Income Fund will be available to institutional clients for use in retirement plans beginning later this month. For more information, TIAA-CREF participants can meet with their TIAA-CREF Advisor or call TIAA-CREF at 1-800-842-2776, or visit www.tiaa-cref.org.
Past performance is no guarantee of future results. Please note that TIAA-CREF Lifecycle Funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. In addition to the fees and expenses associated with the Lifecycle Funds, there is exposure to the fees and expenses associated with the underlying mutual funds as well.
About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields with $437 billion in combined assets under management (9/30/07).
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. Annuity products are issued by TIAA (Teachers Insurance and Annuity Association), New York, NY. Brokerage Services are provided by TIAA-CREF Brokerage Services, a division of TIAA-CREF Individual & Institutional Services, LLC. Advice and Planning Services is a division of TIAA-CREF Individual & Institutional Services, LLC.
Investment products are not FDIC insured, may lose value and are not bank guaranteed. You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 1 877-518-9161 or log on to www.tiaa-cref.org for a prospectus that contains this and other information. Please read the prospectus carefully before investing.
i Morningstar Direct (2007) based on expense comparisons by category.
ii TIAA-CREF consultants are compensated through a salary plus incentive program that emphasizes client service excellence.
iii Any guarantees under annuities issued by TIAA are subject to TIAA's claims-paying ability. Payments under CREF and the TIAA Real Estate Account are variable and will rise or fall based on investment performance.
iv There is no account fee to own a TIAA-CREF IRA; however, brokerage transaction fees may apply. In addition, investors are subject to the underlying funds’ portfolio management fees and expenses.
v A++ (Superior), A.M. Best Company (as of 6/07); AAA, Fitch (as of 5/07); Aaa, Moody’s Investors Service (as of 5/07); AAA, Standard & Poor’s (as of 7/07). These ratings of TIAA as an insurance company do not apply to the TIAA Real Estate Account, to CREF or to the mutual funds.
© 2009 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
