TIAA participants waiting longer to retire

The almost 4.3 million participants in retirement plans managed by TIAA are retiring at later ages and are delaying taking income from their savings, according to research by the company.

Between 2000 and 2018, the average retirement age of women participating in TIAA plans rose from 64.6 to 65.9, while the average age for men rose from 65.5 to 67.5.

Only 40% of new retirees during that period started drawing income from their plan within four years of retirement. The fraction of retirees taking no income until the required minimum distribution age rose from 10% in 2000 to 52% in 2018.

“The combination of later retirement ages and delayed first income means an RMD is becoming the de facto default distribution choice for retirees,” TIAA said, noting the fraction of retirees taking an RMD as first income rose from 10% to 52% while the proportion of retirees taking a life annuity as first income fell from 61% in 2000 to 18% in 2018.

[More: In-plan income is key to retirement security]

Still, about 30% of participants had a life annuity as part of their income distribution, with a life annuity and RMD being the most common pairing of income distributions.

The bulk of participants in retirement plans managed by TIAA, which was founded in 1918 to provide annuity income for college and university faculty in retirement, continue to be employees of educational and nonprofit organizations. Because that demographic tends to be more educated, healthier and wealthier than plan participants generally, the results of the research may not be representative of the overall retiree experience.

[More: 7 risks for retirement income planning]