Retirement Advising Office: Tiaa-Cref Allocation Decisions

There is no right way to allocate your TIAA-CREF 
contributions. Factors you'll need to consider include 
performance differences among the TIAA and CREF accounts, 
diversifying to lower your risk, the effects of inflation, 
your life expectancy and what income you will receive from 
Social Security.

Because retirement investing is a long-term proposition, the 
goal for most people will be steady growth or a combination 
of growth and income. Retirement income can come both from 
stocks, such as several of the CREF accounts, and from fixed 
accounts, such as TIAA. Most experts agree that long-term 
growth can be achieved best by investing in stocks. Remember 
that returns from the CREF variable investments fluctuate and 
there are no guarantees.

You probably also will want some of your retirement savings 
in TIAA's traditional annuity, because it guarantees 
principal and interest while providing the opportunity for 
extra earnings. 

While you may have opinions about the direction of the market 
and inflation rates, remember that since you probably are 
looking at a long time span (including accumulation and 
retirement years), you will experience many market cycles. A 
steady course, using a diversified combination of asset types 
and approaches, may be the best strategy.

Your attitude toward risk is vitally important. There are two 
kinds of risk: investment risk and inflation risk. Investment 
risk relates to the uncertain nature of the prices of 
securities. Different investments expose you to different 
kinds of risk. Most experts agree that you should not take 
too much risk with your pension accumulation. But if you 
don't take enough risk, you may not build enough assets to 
finance the kind of retirement you want. 

Inflation risk refers to the likelihood that the economic 
value of retirement income in the future will decrease due to 
higher prices. For example, assume that the inflation rate is 
5 percent annually. The cost of living would triple in 20 
years, a period of time that one can reasonably expect to 
live in retirement. You would need that much growth from your 
retirement income just to keep up with inflation. Employees 
need to find a risk/reward balance that's comfortable and 
appropriate for them. 

TIAA-CREF has a brief questionnaire designed to help you 
identify your attitude toward risk. For a copy, contact the 
Retirement Advising Office. The office has several other 
TIAA-CREF brochures that discuss these principles, recommend 
allocation models and summarize the performance of the TIAA 
and seven CREF accounts. Articles by the Retirement Advising 
Office and by TIAA-CREF can be found through the Online ISU 
electronic system. If you have questions regarding your 
allocation decisions, contact the office, 4-3830, for an 
appointment.

_____
contact:  News Service, (515) 294-0549
updated:  03-24-95