by David Henggeler, Annuity Sales Consultant


For many of those currently living out their “golden years,” retirement came with a pre-determined plan. Traditional pensions in the form of defined benefit plans meant that the company these retirees spent a lifetime serving would in turn care for them throughout their life after work. When combined with Medicare and Social Security Income, the retirement outlook for this group was solid. They were focused on using concepts like the “Stretch IRA” to leave some of their wealth to their children. But times have changed. The future of retirement for Boomers and Gen Xers alike projects a stark contrast.
With the advent of the 401(k) plan in 1980, the notion of employers taking care of employees in retirement went away. Consumers themselves are now responsible for both saving enough to live on in retirement and making that nest egg last throughout retirement. Yet, statistics are increasingly showing that to be a difficult feat. In fact, according to the Center for Retirement Research at Boston College, 51% of working households are projected to be “at risk” of being unable to maintain their pre-retirement standard of living in retirement.1 Rather than stretching IRAs for beneficiaries as previous generations had, these retirees will need to maximize the value of their assets for their own benefit.

THE IRA

Essentially, an IRA is a retirement savings and income program. At the same time, it’s also a taxable, lifetime asset- liquidation plan. Your clients are going to be required to take withdrawals (RMDs) each year and decrease the value of their IRAs over time. So what happens when your clients run out of money and still need additional income? After all, the Census Bureau is projecting that by 2050, the average life expectancy will increase to 86 for men and 92 for women!2 And what if these clients want or need to take more income than is required? Where will the money come from?

A BETTER IRA

To create a strategy for liquidating assets that allows clients to live on the money they have and make it last almost always requires a tradeoff between consuming less early in the retirement or later, depending on how they prefer to structure their retirement strategy. Why not present them with an option that eliminates the need for a tradeoff? Rather than a Roth IRA, 401(k) or similar retirement savings vehicle, offer clients an IRA solution that generates competitive annual income, a fixed income amount guaranteed to last a lifetime, and safety of principal. For couples entering retirement together, an even better option would include protection for both spouses. In order to achieve all of these financial objectives, Boomers need to consider how an indexed annuity with a solid guaranteed lifetime withdrawal benefit rider could play a part in a better retirement.

NEW IRA SOLUTIONS

Carriers are focusing on consumer needs for retirement in this “new age” by developing product tailored to generating better income over time. Some of the new products introduced this year are prime examples, and two cover both husband and wife if desired. Let’s take a look at three in particular.

NWL IMPACT 10 Annuity and Income Outlook Plus 5 GLWB
When National Western Life rolled out the IMPACT series annuities, it was obvious the landscape for fixed indexed annuities has changed for good. The IMPACT 10 offers a 7% premium bonus, vesting the bonus over years eight through 10. When combined with the Income Outlook Plus 5 income rider, clients receive an additional 5% bonus with a 5% annual roll-up on the income value. That is a huge jump-start to the guaranteed lifetime withdrawal payment, which takes into account the entire premium bonus. This NWL income rider can cover two spouses for their two lifetimes with IRA funds. The full account and bonus value are payable as death benefits.

Aviva Lifetime Solutions Annuity
The release of Aviva’s new Lifetime Solutions Annuity made it clear the carrier is ready to make an impact for Boomer clients. This product provides income benefits for clients regardless of whether they live long, get sick in retirement or want to leave a legacy for loved ones. With a 9% up-front bonus on premiums of $100,000 or more and 8% annual simple Benefit Base growth on the premium plus bonus from day one, the ability for higher lifetime guaranteed payment amounts is elevated. The built-in income rider on an IRA annuity can also cover two lives. A confinement “doubler” benefit is available if the client is confined to a care facility, and a five-pay death benefit could yield a greater legacy for beneficiaries and it also stretches any income taxes over time.

FG Prosperity Elite 14 with the Protection Package
As Fidelity & Guaranty Life assumed a new “old” name, they let consumers know they came to play with the launch of the new Prosperity Elite annuities. On the 14-year product, clients receive a 9% premium bonus vested over the term of the contract. With the selection of the Protection Package, the income base roll-up is the greater of premium with an 18% Income Benefit Base Bonus or premium growing at 7.25% compounded up to 10 years. For health impairment where two lives are covered, the income rider amount increases to 150% for as long as impairment continues. The F&G Protection Package covers individual lives only.

In addition to the bonus potential and safety of principal these products offer, clients can enjoy the potential for even greater payouts if the indexed interest earnings increase. Regardless of what the retirement future holds for your clients, provide them with the safety and lifetime income from carriers you know and trust. For more information on the products mentioned above, visit www.CreativeEdgeMag.com. To discuss particular client needs further or to design solutions that maximize these benefits, contact your Annuity Sales Consultant today.



1 Munnell, Alicia. 4 Reasons Your Retirement Is Riskier Than Your Parents’. SmartMoney Encore, May 23, 2011.

2 Administration on Aging. Aging into the 21st century. Department of Health & Human Services, AOA.gov, last modified January 19, 2011.


FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. 11775 - 2011/6/22 | 18142 175141
NWL® IMPACT 10 (01-1162-10 and state variations) and NWL® IMPACT 7 (01-1160-10 and state variations) are flexible premium deferred fixed indexed annuities issued by National Western Life Insurance Company, Austin, Texas. Certain limitations and exclusions apply. Product not approved in all states. See policy for complete information and details.

Lifetime Solutions Annuity [LTS (04/11)] or state variation] is issued by Aviva Life and Annuity Company, West Des Moines, IA. Product features, limitations and availability vary by state. Availability of products, features and benefits may vary by state and may contain additional restrictions or limitations.

Premium bonus annuities may include lower cap rates, higher spreads or other limitations that are not found in annuities that don’t have a premium bonus feature. The Benefit Base is not the same as the contract's Accumulated Value, and it is never available for lump sum withdrawal; it is only used for calculating lifetime income and death benefit under contract provisions. Accumulation in the Benefit Base stops at the sooner of 1) starting benefit base income, 2) age 85, 3) 10 years unless a restart is elected to extend accumulation to 20 years. Amount and timing of payments under this benefit are subject to IRS limits. Beneficiary can elect to receive the Benefit Base (capped at 2 times the first contract year's accumulated value) paid out over 5 years. The Doubler benefit will cease once the Accumulated Value reaches $0 for IRAs; however, the original income amount will continue for the lifetime of the annuitant. See the Contract for qualifying Confinement criteria.

Prosperity Elite 14, API-1013(02-11), ACI-1013(02-11); et al., is issued by Fidelity & Guaranty Life Insurance Company, Baltimore, MD. Optional provisions and riders may have limitations, restrictions and additional charges. Subject to state availability. Certain restrictions may apply. There is an explicit charge for the Protection Package. The charge is 1.10% and is deducted from the contract’s account value annually after the completion of the first contract year.