The TIAA Graded Payment Method and the CPI

December 1995

The TIAA Graded Payment Method of receiving traditional TIAA annuity benefits was introduced in 1982. Under it, a part of current annuity dividend income is withheld each year in order to increase the annuity income for the following year. As a result, the starting income is lower than under the standard method, but the graded method has a superior capacity for real growth and a built-in mechanism to help maintain purchasing power. This issue examines the actual benefit payment experience of the graded method in terms of how changes in payment amounts have related to changes in the Consumer Price Index.