TIAA or CREF

Faculty in 80 to 90 per cent of private colleges and universities, and in 40 per cent of public institutions, are eligible to participate in the Teachers Insurance and Annuity-College Retirement Equities Fund (TIAACREF) retirement program.1 To many contributors, the accumulation of funds in this program represents the main source of income during retirement. The choice of how to apportion one's contributions between TIAA and CREF is therefore a vital one.2 During my sixteen years of participation, I have not seen a simple, straightforward comparison of the longterm earning performances of TIAA and CREF. Certainly, the annual reports from TIAA-CREF have been helpful towards that goal. Nevertheless, neither I nor my colleagues have been able to make a direct comparison of the performances of TIAA and CREF from these reports. In order to make such a comparison, I present Table 1 based on data furnished to me by TIAA-CREF. This table has been checked for accuracy by TIAA-CREF.8 1 hope it will be very helpful to professionals who are as simple-minded in financial matters as I am. While it is true that the past may not be indicative of future performance, knowledge of the certain past seems vital for extrapolations into the uncertain future. The headings in Table 1 give the year in which monthly investments in TIAA and CREF were begun, starting on January 1. Column 1 gives the year at the end of which the net accumulated funds in TIAA and in CREF are compared. The basis for the comparison is that identical amounts have been paid into these two funds. Also, it is assumed that payments into the funds increase by 6 per cent each year, a reasonable estimate for the rate at which salaries increase from year to year. The body of the table gives the ratios of the funds accumulated in TIAA and in CREF. This ratio represents a direct comparison of the performance of the two