Preparing for retirement is one of the most important financial decisions you can make. Choosing the right retirement provider to invest and grow your nest egg can have a significant impact on your golden years.
Two popular providers, VALIC and TIAA, cater to those working in education, healthcare, government and nonprofit sectors.
But which offers better products, services and value? This detailed comparison examines the key differences between VALIC and TIAA to help you determine the best option.
A Brief Comparison Table
| Category | VALIC | TIAA |
| Investment Options | Wide range of actively managed mutual funds from top asset managers | Focus on index funds and ETFs with lower expenses |
| Annuity Products | Large selection of fixed and variable annuities from leading insurers | Smaller lineup of proprietary annuities with lifetime income options |
| Fees and Expenses | Above average expense ratios on funds; high surrender charges on annuities | Lower expense ratios due to index funds; competitive annuity fees |
| Customer Service | Mixed reviews on call wait times and responsiveness | Mixed results on call centers but appreciated local advisor access |
| Financial Strength | Backed by AIG with $100B+ in assets; strong ratings | $1 trillion+ in assets; top ratings for nonprofit roots |
| Reputation | High marks for personalized service and product selection | Regarded highly for academic market expertise and social responsibility |
Overview Of VALIC
VALIC, which stands for Variable Annuity Life Insurance Company, was founded in 1955 and is a subsidiary of American International Group (AIG). VALIC is one of the leading U.S. providers of annuities and other tax-deferred retirement investment solutions for workers in the academic, medical and cultural fields.
Some key facts about VALIC:
- Offers fixed and variable annuities, mutual funds, life insurance and more
- Over $100 billion in assets under management
- Serves over 24,000 group participants across the U.S.
- Received an A+ (Superior) rating from A.M. Best for financial strength
Pros of VALIC
- Wide range of retirement products and investment options
- Access to an array of well-known fund families and managers
- Strong mobile app and online account management
- National Pension and Group Deferred Compensation networks
- Over 65 years of experience serving nonprofit sector
Potential Cons of VALIC
- Mixed reviews for customer service responsiveness
- Higher fees than some competitors
- Low interest rates on fixed annuities and GIAs
- Limited availability for individuals outside of workplace plans
Overview Of TIAA
TIAA, or Teachers Insurance and Annuity Association, was established in 1918 as a retirement system for educators. Today, it provides insurance, investment and banking products to those working in academic, medical, cultural and government fields.
Some key facts on TIAA:
- Offers annuities, life insurance, mutual funds and more
- Over $1 trillion in assets under management
- Serves over 5 million individuals at 15,000 institutions
- Received an A++ (Superior) rating from A.M. Best
Pros of TIAA
- Broad selection of low-cost index funds and ETFs
- Variety of annuities with lifetime income options
- Strong sustainable and socially responsible funds
- Network of local advisors across the U.S.
- Over 100 years of experience serving the nonprofit sector
Potential Cons of TIAA
- Mixed reviews of customer service and responsiveness
- Limited selection of actively managed funds
- Annuity products tend to have caps and restrictions
- Higher fees than competitors on some products
Now let’s dive deeper into how VALIC and TIAA compare across some key factors:
VALIC And TIAA: In-Depth Comparison Of Key Features
- Investment Options and Fees
Both VALIC and TIAA offer access to annuities, mutual funds, ETFs and more to construct a diversified retirement portfolio. However, there are some notable differences in the investment products and fees offered.
VALIC provides a range of fixed and variable annuities from leading insurance companies, along with mutual funds and managed accounts from 60+ investment managers including PIMCO, JPMorgan and Goldman Sachs. The variable annuity products tend to have higher fees but offer a wider selection of investment subaccount options compared to TIAA.
TIAA offers more index funds and ETFs that track market indexes and come with lower investment expenses. Its variable annuities also include indexed options with caps on gains. While TIAA has fewer actively managed mutual funds, its funds overall tend to have lower expense ratios than VALIC’s offerings.
Winner: TIAA offers lower-cost index funds and overall lower fund expenses compared to VALIC.
Also Read: Comparison Between TIAA And Voya.
- Annuity Products and Features
For retirees seeking lifetime income, the annuity products and benefits offered by each provider are an important consideration.
VALIC’s clients have access to over 40 fixed and variable annuity products underwritten by leading insurers such as AIG and Nationwide. VALIC annuities offer competitive payout rates along with riders for death benefits, long-term care and more. However, the products can have high expenses and surrender charges.
TIAA provides a smaller lineup of fixed and variable annuities, including lifetime income and deferred income options. The company is known for its guaranteed annuity products and indexed annuities that balance growth potential with downside protection. However, gains can be limited by caps.
Winner: Draw – VALIC offers a wider range of annuities while TIAA annuities charge lower fees. Consider your specific needs.
- Customer Service
Having knowledgeable professionals who can answer your questions is key during retirement planning. How do VALIC and TIAA stack up when it comes to customer service?
VALICparticipants can access client services at national call centers along with local advisors from AIG Retirement Services. However, VALIC has received mixed reviews from clients on call wait times and advisor responsiveness.
TIAA also offers national phone service and local face-to-face advisor support across the U.S. Client feedback indicates uneven call center experiences but overall appreciation for the accessibility of local TIAA advisors.
Winner: Draw – Both providers offer a combination of phone support and in-person advising, but have received mixed reviews from clients.
- Financial Strength and Reputation
When choosing a retirement provider, it’s important to consider their financial stability and reputation. VALIC and TIAA are both highly rated but have some differences.
VALIC has earned strong ratings for financial strength from agencies like A.M. Best, reflecting its backing by insurance giant AIG. Retirement plan advisors give VALIC high marks for its personalized service model and variety of products. However, VALIC has faced lawsuits over allegedly excessive fees in university 403(b) plans.
With over $1 trillion in assets under management, TIAA also boasts exceptional financial strength along with top ratings from agencies such as Moody’s and Fitch Ratings. TIAA is well regarded for its nonprofit roots, socially responsible offerings and academic retirement expertise.
Winner: TIAA edges out VALIC when it comes to reputation, nonprofit mission and assets under management.
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Making The Right Choice
Determining whether VALIC or TIAA is the better choice comes down to weighing your specific needs and priorities:
- Investment options: TIAA if you want low-cost index funds; VALIC for more active management.
- Annuities: VALIC for flexibility; TIAA for lower-cost lifetime income.
- Fees: TIAA for lower overall fund expenses.
- Service: Mixed results for both, consider local advisor access.
- Financial strength: Both receive high marks but TIAA is ahead.
For teachers, doctors, scientists and other nonprofit workers, either VALIC or TIAA can be a sound choice for investing, income, insurance and other retirement needs. Do thorough research to decide which provider best aligns with your goals and preferences.
Frequently Asked Questions (FAQ)
Yes, VALIC has faced lawsuits in recent years over fees charged in retirement plans for several universities. The company denies wrongdoing.
VALIC is considered one of the leading providers for the nonprofit sector. It offers a wide range of investment products and services. However, some clients complain of high fees.
TIAA stands for Teachers Insurance and Annuity Association. It was founded nearly 100 years ago to provide retirement benefits for teachers.
Like other major retirement providers, TIAA has faced lawsuits over fees and sales practices. Critics argue TIAA promotes its own products too heavily within the plans it manages.
Also Read: Comparison Between myAutoloan And LightStream.
The Bottom Line
When comparing VALIC Vs. TIAA for your retirement savings, look at the full range of products, services, costs and client experiences. Weigh factors like annuities, investment selection, fees, ratings and more.
Determine whether VALIC’s active management and varied offerings or TIAA’s nonprofit approach and index funds are the better match for your investment style and financial objectives.
