Greetings to all educators in higher education! Greg Shepard here,
representing S&A Financial Services, and I'm here today to delve into a
subject that's particularly pertinent for those of you navigating the intricate
landscape of higher education retirement plans.
We're living in a time of constantly evolving financial landscapes
and investment opportunities. Today, I want to center our discussion around a
specific aspect of TIAA (Teachers Insurance and Annuity Association) retirement
plan contract, namely the RCP contracts. It's vital for you, especially given
the current high-interest rate environment, to understand why taking a closer
look at TIAA Traditional within your RCP contracts might be the missing piece
in your financial puzzle.
I can't stress this enough – while the information I'll provide
might change in the coming years, it's valuable for you today, on this 20th of
So, why is this focus on high-interest rates in TIAA Traditional
within RCP contracts so significant? Let's explore.
The RCP Contracts - A Hidden Gem
The core of our discussion revolves around RCP contracts –
Retirement Choice Plus. These contracts harbor an attribute that many may not
be aware of: liquidity when it comes to TIAA Traditional.
This liquidity in your RCP contract is of paramount importance
when you consider the high interest rates currently being offered by TIAA
Traditional. And why is this significant? Well, on the 20th of October, 2023,
new money funneled into your TIAA Traditional within an RCP contract is earning
an attractive 6% crediting interest.
Now, let's take a moment to absorb the implications of this. If
you're familiar with higher education retirement plans, you might realize that
finding a bond investment under the TIAA platform that's consistently
outperforming 6% is a rarity. Most institutions' bond funds don't come close to
such a return.
This, my friends, is why our strategy becomes intriguing. And let
me emphasize – this is not financial advice. It's an exploration of an enticing
opportunity, so please consult a financial expert to see how it aligns with
your individual financial goals.
Unlocking Potential: RCP Contracts and TIAA Traditional
Let's dissect this a bit further. The interest rate being offered
in TIAA Traditional within your RCP contract is notably higher than what's
commonly found in comparable investments. As of October 20, 2023, the 6%
interest rate stands tall, outshining most fixed-income alternatives available
to you in your higher ed retirement plan.
In contrast, when you examine the vast majority of higher
education institution retirement plans, the bond investment options typically
underperform the 6% rate. This situation creates a golden opportunity.
Let's dive into the potential strategies you might consider:
Bond Investments: If your portfolio
includes bond investments under the RCP contract, it could be advantageous to
transition a portion or the entirety of that bond portfolio into TIAA
Traditional within the same RCP contract. Doing so allows you to enjoy the 6%
return rate, a considerably more attractive option than most bond investments
in higher education retirement plans.
Swap: If you hold a GSRA
contract, you might be missing out on better returns offered by RCP's TIAA
Traditional. The remedy? Utilize the contract-to-contract swap, which can be
done online in most cases.
3. Transfer Payout Annuity (TPA):
Consider leveraging TPAs to create liquidity. In this process, you can conduct
a TPA out of an illiquid contract, thus freeing your money over the course of a
number of years. You can then funnel these funds into your liquid RCP contract,
giving you the chance to earn a more attractive interest rate. Remember, TPAs
can be somewhat more complex, so consulting a financial expert is a wise
The Takeaway: Don't Miss the Opportunity
In essence, the message here is quite clear. If you're an educator
with an RCP contract, it's in your best interest to examine the potential of
TIAA Traditional. This is especially crucial if your portfolio contains bond
investments that are underperforming in the current market.
While the financial world is continually shifting, and the opportunities
we're discussing today might not be available tomorrow or the coming years,
there's no denying the importance of taking advantage of what's within reach
currently. In this case, it's the rare circumstance of extraordinarily high
interest rates in TIAA Traditional.
Don't let this opportunity slip through your fingers. It's a
moment to harness the strengths of your retirement plan and seize the chance to
maximize your financial well-being.
Conclusion: Invest in Your Financial Future
So, the path is clear – explore your RCP contract, unlock the
power of TIAA Traditional, and harness the benefits of current high interest
Remember, this isn't just another financial strategy; it's a
pivotal moment that could significantly impact your financial future. But I
implore you once more – consult a financial expert to craft a strategy that
fits your specific financial objectives.
As educators, you’ve dedicated your lives to nurturing knowledge.
Now, it's time to ensure your financial futures are equally well-crafted. Don't
hesitate – take charge of your financial destiny today.
Seize this moment, go out and have a fantastic day, and as always,
feel free to reach out if you need guidance. Your financial future is worth
every bit of attention.
Contact Information: If you have questions or need assistance with your retirement plan choices, you can reach out to Greg Shepard at firstname.lastname@example.org
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*Nothing discussed in this blog post should be construed as investment advice. Each situation is unique and you need to receive professional advice from independent fee-only financial advisor that's familiar with higher ed retirement plans prior to implementing any strategies discussed or thought of on your own.
**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.