Research on tax uncertainty and savings diversification wins TIAA Paul A. Samuelson Award

The TIAA Institute announced that David Brown and Scott Cederburg of the University of Arizona and Michael O’Doherty of the University of Missouri have won the 23rd Annual TIAA Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security. The Samuelson Award recognizes outstanding research that the private and public sectors can use to maintain and enhance Americans’ financial well-being.

The award-winning report, “Tax Uncertainty and Retirement Savings Diversification” investigates optimal savings decisions for investors with access to both traditional and Roth retirement accounts using a model that featured a progressive tax schedule and uncertainty of future tax rates. The study found that an optimal asset allocation for most households involves diversification between traditional and Roth type accounts. This can provide households with additional flexibility in managing their consumption throughout the life cycle and balance risks of structural tax code changes.

“With this research, David Brown, Scott Cederburg and Michael O’Doherty have provided data and analysis that adds new insight to our knowledge of tax uncertainty and savings best practices,” said Stephanie Bell-Rose, Head of the TIAA Institute. “Their conclusions regarding the importance of diversified account types provides clear, tangible advice that will benefit the financial security of everyday Americans.”

“We’re honored to be receiving this award,” said the report’s authors David Brown, Scott Cederburg, and Michael O’Doherty. “We appreciate that the Samuelson Award judges recognized the importance of our research and the insights it reveals into retirement savings best practices, and we hope that financial professionals can use this information to provide more effective advice and guidance to the American public.”

“The authors corroborate some aspects of conventional wisdom, such as the recommendation that individuals with low current income should use Roth accounts,” said John Beshears, one of the Samuelson Award judges. “However, the authors also highlight issues that are often underappreciated, such as the importance of Roth accounts—even for high-income individuals—as a tool for managing the risk of future changes in the income tax schedule. The paper provides valuable practical guidance that will help individuals better prepare for their financial futures."

About the TIAA Institute

The TIAA Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness. The institute conducts in-depth research, provides access to a network of thought leaders, and enables those it serves to anticipate trends, plan future strategies and maximize opportunities for success. For more information about the TIAA Institute, visit www.tiaainstitute.org and follow us on Twitter @TIAAInstitute.

About TIAA

With an award-winning [1] track record for consistent investment performance, TIAA is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $1 trillion in assets under management (as of 9/30/2018[2]) and offers a wide range of financial solutions, including investing, banking, advice and education, and retirement services.

[1] The Lipper Large Fund Award is given to the group with the lowest average decile ranking of three years’ Consistent Return for eligible funds over the three-year period ended 11/30/12 (36 fund companies), 11/30/13 (48), 11/30/14 (48), 11/30/15 (37), 11/30/16 (34) and 11/30/17 (34) with at least five equity, five bond, or three mixed-asset portfolios. Note this award pertains to mutual funds within the TIAA-CREF group of mutual funds; other funds distributed by Nuveen Securities were not included. From Thomson Reuters Lipper Awards, © 2018 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or retransmission of this Content without express written permission is prohibited. Past performance does not guarantee future results. Certain funds have fee waivers in effect. Without such waivers ratings could be lower. For current performance, rankings and prospectuses, please visit the Research and Performance section on TIAA.org. Securities offered through Nuveen, LLC, and TIAA-CREF Individual & Institutional Services, LLC, members FINRA and SIPC.

[2] Based on $1 trillion of assets under management across Nuveen Investments affiliates and TIAA investment management teams as of 9/30/18.