Retirement planning can be overwhelming with so many options to choose from. Two popular choices are TIAA and Fidelity, but they have some key differences when it comes to fees, investment choices, and more.
This comprehensive guide examines the pros and cons of TIAA and Fidelity to help you decide which retirement plan is right for your needs.
A Brief Comparison Table
| Category | TIAA | Fidelity |
| Fees | Lower expense ratios on funds | Varies – has low cost index funds but some managed funds have high fees |
| Investment Options | More limited menu of mainly actively managed funds | Much wider range of index funds, stocks, ETFs, bonds and more |
| Accounts Available | 403(b), 401(k), IRA, annuities | 403(b), 401(k), IRA, annuities, individual brokerage accounts |
| Guidance | Retirement plan advisors | Access to certified financial planners |
| Online Experience | Simple online access | Robust trading platforms and mobile apps |
| Income Options | Lifetime annuities | Flexible – no guaranteed income products |
| Rollovers/Withdrawals | More restrictive rules | Easy to roll over old plans into Fidelity IRA |
| Customer Service | Salaried agents | 24/7 phone support and chat |
| Employer Plans | Non-profit, education, healthcare, government | All industries |
Overview Of Tiaa And Fidelity Retirement Plans
TIAA (Teachers Insurance and Annuity Association) and Fidelity are two well-known providers of retirement plans like 403(b), 401(k), and IRA accounts.
TIAA was originally designed as a pension plan for teachers and educators. It has since expanded to serve employees in the healthcare, government, and non-profit sectors. TIAA offers annuities to provide guaranteed income in retirement.
Fidelity offers a broader range of retirement plans and services for both individual investors and employers. Fidelity is a leader in administering 401(k) plans for private companies. It also offers IRAs, mutual funds, ETFs, and other investments.
While both TIAA and Fidelity offer robust retirement planning options, there are some key pros and cons to weigh when choosing between them:
Also Read: Comparison Between TIAA And Voya Retirement Plan.
Pros And Cons Of Tiaa And Fidelity
TIAA Pros
- Non-profit roots: TIAA was started as a non-profit to serve university employees and still operates to benefit its participants.
- Lifetime annuity options: TIAA Traditional Annuity guarantees monthly lifetime income that you cannot outlive.
- Low fees: TIAA’s expense ratios and investment fees are generally lower than Fidelity’s.
- Customer service: TIAA is known for quality customer service with salaried agents and advisors.
TIAA Cons
- Limited investment choices: TIAA offers fewer investment options compared to Fidelity. TIAA’s funds are also mainly actively managed with higher costs.
- Less flexibility: TIAA has more restrictions on withdrawing or rolling over retirement funds. Lifetime annuities also lock in monthly payments for life.
- Lack of advice: TIAA provides assistance but does not offer comprehensive financial planning or advice like Fidelity.
Fidelity Pros
- Wide range of investment options: Fidelity offers thousands of mutual funds, ETFs, stocks, bonds and more to build customized portfolios.
- Low-cost index funds: Fidelity has no minimums to invest in its zero fee index funds.
- Financial planning: Fidelity provides access to certified financial planners for retirement advice.
- Rollover flexibility: It is easy to roll over old 401(k)s or 403(b)s into a Fidelity IRA with no fees.
- Robust online tools: Fidelity offers leading online platforms to manage your investments.
Fidelity Cons
- Account fees: Fidelity charges annual account fees on IRAs and some higher expense ratios on managed funds.
- Lack of lifetime income: Fidelity does not offer guaranteed income annuities – you have to self-manage withdrawals.
- Complex array of options: The huge range of investment choices at Fidelity can be overwhelming.
- Ads and marketing: Fidelity sends a lot of promotions and tries to cross-sell other products.
Also Read: Comparison Between Thrivent And Fidelity.
Making The Right Choice Between Tiaa And Fidelity
There are good reasons to choose either TIAA or Fidelity for your retirement planning depending on your specific needs and priorities. Keep these tips in mind when deciding between the two:
- Compare investment options to see which fits your preferred asset allocation
- Look at account fees, fund expense ratios, and any advice costs
- Consider whether guaranteed lifetime income is important
- Make sure there is flexibility to rollover or transfer funds in the future
- See if online tools and resources fit your technical skill level
For educators and employees in the non-profit sector, TIAA’s annuities and pension-like benefits may be appealing. Investors who want maximum choice and the ability to be more hands-on may prefer Fidelity.
Think about whether you will want to manage your investments yourself or have professional advice. Also factor in customer service and the convenience of managing your accounts.
Don’t forget to look into employer matches and vesting schedules as well. Workplace plans like 403(b)s and 401(k)s often have free or discounted offerings from providers like TIAA and Fidelity.
Also Read: Comparison Between Wells Fargo And Regions Bank.
Frequently Asked Questions (FAQ)
TIAA is one of the best options for non-profit, government, and education employees because of its low fees, lifetime income products, and good service. It offers a wide array of annuities and mutual funds. The restrictions and lack of investment choices may be a downside for some investors.
TIAA plans like 403(b)s have comparable pre-tax contribution limits and often lower costs than many 401(k) plans at for-profit companies. Lifetime annuity payouts provide uniqueness from 401(k)s. But 401(k)s typically offer more investment options and flexibility.
TIAA is a solid choice if you want low-cost mutual funds and annuities that guarantee income for life. Returns may be more modest due to fewer growth-oriented investments. TIAA caters more towards retirement versus general investing goals.
TIAA is a hybrid between a pension and 401(k). Its Traditional Annuity gives guaranteed payments for life like a pension. But its other products like IRA mutual funds work more like a defined contribution 401(k) where payouts vary. Overall, it is best described as a pension-style retirement plan.
Also watch this video about Tiaa!
The Bottom Line
When choosing between TIAA Vs. Fidelity for your retirement planning, weigh your need for investment choice, low fees, guaranteed income, service, and more. Employees in the non-profit and public sectors may find TIAA’s hybrid pension-style benefits more tailored to their needs.
Investors wanting maximum flexibility and investment options may be better served by Fidelity. Consider your specific priorities and look at all the pros and cons when deciding where to invest your retirement nest egg.