Guaranteed Growth & Lifetime Withdrawal Basics

Financial Oversight: Neglecting the Advantages of Guaranteed Growth for a Sustainable Lifetime Income.

Essential Aspects of Guaranteed Income Account Value Growth and Lifetime Withdrawals

Certain fixed indexed annuities offer a guaranteed lifetime withdrawal benefit applicable to you and your spouse, or both, usually as an optional feature. This guarantee allows you to withdraw funds from the annuity even if the underlying cash value eventually diminishes to zero. The annuity is associated with what is commonly referred to as an Income Account Value, although specific terminology may differ between companies.

Some annuities provide guaranteed growth of the income account value, enabling you to forecast the minimum income to be derived from your retirement funds with greater accuracy. Whether you are currently saving for future income or have initiated withdrawals from your retirement savings, this option alleviates uncertainty in income planning, eliminating reliance on speculative performance.

Here are some typical features of indexed annuities that include a guaranteed withdrawal benefit.

♦ Lifetime income persists even if the cash value reduces to zero.

♦ Many of these financial products feature a predefined minimum growth rate for the Income Account Value, which is essential when calculating future income distributions.

♦ The Income Account value continues to appreciate until a decision is made to start receiving income. At that point, the check amount is determined by multiplying the income account value by a payout percentage based on age (and occasionally gender), as well as whether the payment is for one life or two lives (for couples opting for a joint payout).

♦ The established minimum growth rate for the income account value allows for forecasting a guaranteed minimum check at a future date. Delaying the initiation of lifetime income withdrawals typically results in a larger distribution. Additionally, waiting longer may increase the withdrawal percentage derived from the initial premium.

♦ Generally, this feature is available as an optional benefit, which comes with an associated fee.

♦ Most contracts permit a penalty-free withdrawal of up to 10% of cash values prior to activating the lifetime withdrawal benefit. While such withdrawals may proportionally reduce the income account value, there remains potential for continued growth in subsequent years, which supports future lifetime income options. This provision provides the contract holder with flexibility in the event of unexpected expenses.

♦ Typically, this optional rider is only available during the initial purchase and cannot be added afterward. However, many contracts do allow for the termination of the rider and associated fee after purchase.

♦ In most contracts, the cash value serves as the death benefit for the beneficiaries.

♦ Certain annuities offer the prospect of a guaranteed lifetime check that increases over time, while others provide a fixed amount once initiated.

Explore the potential of your guaranteed check today!

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*Please note that guaranteed minimum growth rates, payout factors, and income for life details may vary by contract. We encourage you to discuss these details with your Future Benefits agent. Also, keep in mind that distributions from traditional IRAs before age 59½ are subject to ordinary income taxes and may incur a 10% IRS federal tax penalty. Interest distributed from non-IRA annuities and Roth IRAs is also subject to ordinary income tax and may similarly be subject to a 10% IRS federal tax penalty.

For further information, please refer to our Professional Disclaimer.