“Personal Pension Plus”

Client Scenario

Julie

Julie is turning 65 in a few years. She’s highly educated, and in excellent health. According to data from The American Academy of Actuaries she may need to plan for a retirement that’s twice as long as her grandmother’s.

When her grandmother, Alice, turned 65 in 1960, the average life expectancy for a woman her age was 80 years old—which meant that she would need income in retirement to last just 15 years.1

Since then, rapid advances in medical technologies have extended life expectancies. Today, there’s a 47% chance that at least one of a couple of 65 year-olds in excellent health will live to age 95.2

Like most Americans, Julie doesn’t have a pension. Instead, she has saved in her company-sponsored 401(k) plans and in an IRA throughout her career. She wants to retire but doesn’t know what percentage of her retirement savings she’ll need to draw each year to sustain her lifestyle without fear of depleting it.

Unlike her Grandmother Alice, who retired with a pension AND social security, the risk that Julie may outlive her retirement savings is solely hers, and unlike her Grandmother, there’s a really good chance she may live well into her 90s.

With help from her financial planner, Julie was able to assess her projected Social Security income, and her projected income need to determine how much of her retirement assets she would need to cover with a protected income solution that would guarantee her a stream of income for life. With features similar to a “Personal Pension,”3 her planner recommended a contingent deferred annuity (“CDA”) that allowed Julie to transfer the risk she’ll outlive her savings to an insurance company without moving those assets to the insurance company.

A CDA can provide consistent, sustainable income she can’t outlive – to secure her spending power in retirement. It’s a straightforward process, Julie can simply wrap the income guarantee around leading ETFs or mutual funds in her IRA, Roth IRA or brokerage account.

With this innovative new portfolio retirement income guarantee, Julie could receive a retirement paycheck from 3-6% of her income base annually…For life.

The CDA pays her based on the value of her covered investments. If her account value grows, so can the size of her retirement paychecks.

If markets perform well through the first five or ten years of her retirement, she may no longer need the coverage and can simply remove it. For all of the flexibility this powerful portfolio retirement income guarantee provides, Julie’s financial planner calls it a “Personal Pension Plus.”

This hypothetical example is for illustrative purposes only and is not representative of any future performance. The date covered asset value is reduced to zero could be lesser or greater based on market conditions. Assumes to excess withdrawals. The use of alternative assumptions could produce significantly different results. For details on potential scenarios, ask your financial professional for detailed illustrations.

1 Life expectancy at birth table, CDC, Health, United States, 2010 https://www.cdc.gov/nchs/data/hus/2010/022.pdf variable subaccounts, which fluctuate with market conditions.

2 American Academy of Actuaries and Society of Actuaries, Actuaries Longevity Illustrator, http://www.longevityillustrator.org/, (accessed May, 24, 2021).

3 A CDA is not a pension, nor does it contain all of the same features or benefits of a pension; it is a type of insurance. Guarantees are backed by the claims-paying ability of insurance company and do not apply to the investment performance of the covered ETFs and/or mutual funds, which fluctuate with market conditions.

Personal Pension Plus Julie

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