TIAA Target-Date Portfolios, 102 Years of Investing Wisdom Benchmarked

TIAA-CREF-target-date-portfolios

TIAA Target-Date Portfolios are one-stop funds. They are exposed to between 70% to 95% stocks and 5% to 30% bonds. They can be built with just 4-6 ETFs. TIAA Target-Date Portfolios are medium and high-risk portfolios.

For the past 10 years the TIAA-CREF Lifecycle 2050 portfolio returned 10.51% with a standard deviation of 16.20%. The dividend yield is 2.11. The 30-year return is 9.35%. Year to date TIAA-CREF Lifecycle 2050 portfolio has returned 5.83%. Last year it returned 26.5%.

How do you build the TIAA-CREF target-date portfolios?

Below you can see how to build TIAA-CREF Lifecycle 2050. You can find many more below. 64.70%  US Total Stock Market

  • 64.70%  US Total Stock Market
  • 19.90%  Int. Developed Blend
  • 7.20%    Emerging Markets
  • 8.20%    Total US Bond Market

What is the return of the TIAA Lifecycle portfolios?

Below you can see performance and risk for the TIAA target-date portfolio. We have used our own data and time-series to benchmark the return.

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
TIAA-CREF Lifecycle 203066.0122.018.89%8.7720.04%
TIAA-CREF Lifecycle 204045.925.1910.04%9.230.04%
TIAA-CREF Lifecycle 205045.8326.510.51%9.3530.04%
TIAA-CREF Lifecycle 206045.7926.9510.66%9.430.04%
TIAA-CREF Lifecycle Index Retirement Income65.6515.96.52%7.6510.04%

Who isTIAA-CREF?

TIAA-CREF is now rebranded as only TIAA. It stands for  Teachers Insurance and Annuity Association of America-College Retirement Equities Fund.

TIAA is the leading provider to people within academic, research, medical, cultural, and governmental fields. TIAA has $1 trillion in combined assets under management.

TIAA is a non-profit organization established 102 years ago in 1918 by the philanthropist and industrialist Andrew Carnegie. 

The Lifecycle Funds glidepath, the planned progression of asset allocation changes over time, has been structured with the objective of maximizing risk-adjusted outcomes by investing in a diversified portfolio of equity, fixed income, and direct real estate investments.

– TIAA-CREF fund description

Let’s spend a few minutes discussing a real-life super-hero.

Andrew Carnegie is one of my heroes. Andrew Carnegie transcends what it means to be a superhero. Spiderman, Superman or even Doctor Manhattan are called superheroes because of their obvious super-human abilities. Andrew Carnegie didn’t have superpowers as such but he arguable did more for humanity than all of the fictitious superheroes ever did, combined.

The next time you want to watch the next installment of Avengers or X-men, why not instead dive into a super-hero that did more than all of these. A good place to start is the book, Andrew Carnegie.

Andrew Carnegie was deeply passionate about spreading and democratizing knowledge. He founded libraries and gave away donations to further education and science. It is estimated he gave away $65 billion in the last 10 years of his life (in modern-day dollars).

“The man who dies rich, dies disgraced.”
― Andrew Carnegie

Alright, let’s get back to investing and TIAA.

Description of the TIAA Lifecycle portfolios

The TIAA target-date funds are called Lifecycle funds. They are made of other funds. They are funds of funds in other words. This is the standard and smart way of constructing a target-date fund. Many if not most other target-date funds are constructed this way, fx, Dimensional Fund Advisors, Vanguard, and Fidelity.

Please note, these are called Lifecycle Index Fund. They use passive index funds. TIAA also has active Lifecycle funds which are twice as expensive if you buy them in fund form.

Disclaimer: These are target-date funds. By design, their asset allocation will change over time. In general, target-date funds shift more of their assets towards bonds as you age to lower your risk. This means that the asset allocation below will have changed until we update it here at portfolioeinstein.com.

The simple illustration below is one of the most elegant explanations of how a glide-path work.

tiaa-cref-lifecycle-fund life
Source: TIAA

They follow a standard glide path philosophy as do all other target-date portfolios. The closer you are to retirement age the greater the bond allocation will be. Bonds (fixed income) have a lower risk level than stocks (equities).

See the video below. It is TIAA promotional video on its target-date funds.

The portfolios are relatively simple. They use 4-6 different asset classes. I particularly like that the 2060 portfolio has a low allocation to bonds. Usually, the standard is around 10% but TIAA only uses 5%. Bonds are present to shield the portfolio against volatility, wild swings in price in other words. A 5% allocation to bonds or even 10%allocation to bonds isn’t going to shield the portfolio in any noticeable fashion. It’s about as effective as a few ants trying to slow down an 18-wheeler truck.

Asset Allocation for the TIAA Lifecycle portfolios

Disclaimer: These are target-date funds. By design, their asset allocation will change over time. In general, target-date funds shift more of their assets towards bonds as you age to lower your risk. This means that the asset allocation below will have changed until we update it here at portfolioeinstein.com. This information on these funds was collected in 2018.

Note: Please check the fund prospectus for the exact asset allocation and funds to use.

TIAA-CREF Lifecycle 2030

  • 48.70%  US Total Stock Market
  • 14.90%  Int. Developed Blend
  • 5.40%    Emerging Markets
  • 1.30%    Short Term Treasury
  • 28.40%  Total US Bond Market
  • 1.30%    TIPS

TIAA-CREF Lifecycle 2040

  • 59.90%  US Total Stock Market
  • 18.50%  Int. Developed Blend
  • 6.70%    Emerging Markets
  • 14.90%  Total US Bond Market

TIAA-CREF Lifecycle 2050

  • 64.70%  US Total Stock Market
  • 19.90%  Int. Developed Blend
  • 7.20%    Emerging Markets
  • 8.20%    Total US Bond Market

TIAA-CREF Lifecycle 2060

  • 66.30%  US Total Stock Market
  • 20.40%  Int. Developed Blend
  • 7.50%    Emerging Markets
  • 5.80%    Total US Bond Market

TIAA-CREF Lifecycle Index Retirement Income

This is for when you are already in retirement.

  • 28.20%  US Total Stock Market
  • 8.70%    Int. Developed Blend
  • 3.20%    Emerging Markets
  • 10.00%  Short Term Treasury
  • 39.90%  Total US Bond Market
  • 10.00%  TIPS

How we select the right ETFs

There are a lot of ETFs out there. Most of them can be discarded because:

  • They are too expensive
  • They hold too few assets and are therefore too illiquid
  • They do not meet the criteria for representing the asset class they are supposed to mirror.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

If you are a European investor you need to buy European ETFs. We list 47 best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).

As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

Resources for the TIAA Lifecycle portfolios

Here is the TIAA youtube channel. It has some good investing tidbits.

You can compare different Target Date Funds in the article What Is The Best Target Date Fund?

If you need a primer on target-date portfolios you should go read article Target Date Fund Portfolios.

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool

Related questions

Are Target Date Funds good investments?

Yes, target-date funds are for the most part great investments for many people. Target-date funds are a one-stop fund that you can buy early in life and hold until retirement.

What asset class are target date funds?

Target-date funds typically hold different asset classes. The most common are stock and bonds. Target-date funds are as such not an asset class, but a fund-of-funds that hold other asset classes.

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