TIAA: Retirees Can Boost Spending Power 30% Above DIY Withdrawals

New retirees can take advantage of market volatility in 2026 to boost their first-year spending power by 30% than what they would get from a standard, systematic 4% withdrawal, according to a TIAA white paper published Wednesday.

Amid ongoing market volatility, TIAA, which sells annuities, recommended retirees and pre-retirees consider creating a guaranteed income stream to bolster their retirement income. Rather than withdraw the standard 4% of total savings in the first year of retirement and then recalibrate future drawdowns based on inflation in subsequent years, TIAA proposed a hybrid approach: annuitize one-third of one’s savings—by buying a fixed annuity—and apply the 4% withdrawal on the balance.

In 2026, the hybrid approach would deliver 30% more money to a first-year retiree than the traditional 4% annual drawdown approach. For example, as of March 1, a plan participant with a $1 million retirement plan balance could receive $51,867 in the first year of retirement from the hybrid approach, compared with $40,000 from standard drawdowns, according to TIAA, because interest rates currently tend to be higher than 4%. A single 67-year-old purchasing a product like the TIAA Traditional Annuity—with payments guaranteed for at least 10 years—would receive 7.6% of their annuitized money annually over that period.

According to TIAA, the ability to have 30% more income is down from the added 33% that could be locked in 2025, in part because interest rates have fallen from last year’s levels.