A cohort analysis of the investment performance of TIAA Traditional Annuities during working life

January 2022

Abundant economic and public policy data suggest that many Americans will struggle to maintain an adequate income in retirement.


To help retirement savers and those who advise them, this study examines the role of TIAA Traditional Annuities (“Traditional”) as part of an investment portfolio during the accumulation phase of retirement plan participation. Using five standard measures of investment performance, the authors analyze how allocating a portion of a portfolio to Traditional affected results for 10 distinct cohorts between March 1970 and February 2021. 

Key Insights
For each cohort, participants would have improved risk-adjusted portfolio performance by replacing some of their allocation to commonly used fixed-income funds with allocations to Traditional.
For all cohorts, retirement portfolios with allocations to Traditional had a higher return for a given level of risk (or lower risk for a given level of return.)
The benefits are especially notable for participants whose risk tolerance would lead to higher fixed income allocations in their retirement portfolio.

To analyze how Traditional affected portfolio performance relative to investment alternatives, the authors use average returns and variability of returns, risk-adjusted returns, efficient investment frontiers, optimal portfolio weights and stochastic dominance.