With TIAA, and I assume other companies offering retirement accounts, you have money in a pool made up of your contributions and interest they have warned.
You have the option, which many people take, of devoting a large portion of your pool funds to an annuity, a monthly payment that lasts until you die, at which point the company keeps whatever is left of the money you devoted to an annuity. (There can be other arrangements, like half your annuity going to your spouse when you die, but we’ll ignore them here.)
Now, no doubt the fact that it pays until you die is an attractive aspect of an annuity.
But, it you have a relatively large amount in your pool, you can easily have the pool pay you each month an amount equal to that which would be paid by the annuity.
And by doing this your estate, rather than the company, gets whatever is left over from the amount you had devoted to your self-paid monthly payments.
QUESTION: If the above is correct, why would anyone get an annuity from the company, which would keep whatever is left of the money you devoted to the annuity, rather than what’s left going your estate.?
Note: The above assumes that you die before the money you have devoted to your monthly annuity payments is used up. But perhaps this is balanced by money the company must pay if you outlive the money you have devoted to your monthly annuity payments, so that the company, which must pay you until you die, must pay out of it’s own money. But this is just agues.