The Risk Outliving Your Money
The Risk Inflation
Now that John and Annie feel a little more confident in their retirement knowing there is a product that allows them to receive a portion of the market gains with protection against losses, Annie brings up another worry of hers… longevity. It is now common to live up to 25 years in retirement and, for many, even longer! Annie is concerned that they will outlive their money. The
Highlander ® has a Lifetime Withdrawal Rider that may be exactly what they are looking for to keep them from outliving their nest egg. The Lifetime Withdrawal Rider is an optional benefit with the Highlander ® at an additional cost. The rider guarantees you can withdraw a minimum amount of income from your annuity each year as long as you live.
The Highlander’s Lifetime Withdrawal Rider provides
John mentions, during the conversation with their financial advisor that the Highlander ® sounds like a good fit, but he’s still contemplating other alternatives that are low risk and low return options. The main issue with holding assets in cash is the risk of inflation over time. Effectively, what once bought two candy bars now may only be enough to afford one. Candy bars may not
be a major concern, but having enough income in retirement sure is for John and Annie. Thankfully, with the Highlander ® , not only does their income never decrease if they don’t take any excess withdrawals, it has the opportunity to increase over time. Let’s take a look at how an investment in the S&P 500 with a “Cap Rate” has compared to the historical U.S. inflation rate over the past 30 years.
The Highlander’s Lifetime Withdrawal Rider provides income protection and growth opportunities.
income protection and growth opportunities along with the security of knowing your income is guaranteed to last a lifetime.
Hypothetical Index Credit
S&P 500 Index with Cap vs. U.S. Inflation Rate
Benefit Base $142,142
$142,142
300,000
Index Credit +4%
$136,675
Index Credit +4%
250,000
$127,259
Index Credit +4%
$117,832 Index Credit +4%
200,000
$100,000 Initial Premium $105,000 After 10% Benefit Base Bonus
$118,727
Account Value $117,659
150,000
$115,721
$117,659
100,000
$112,280
$100,000 Initial Premium $110,000 After 10% Bonus
50,000
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Year 1 3.00%
Year 2 4.00%
Year 3 3.53%
Year 4 0.00%
Inflation Rate*
S&P 500 Index w/5% Cap Rate
*Account values reflect applied rider charge. This example illustrates index crediting and does not represent the past or future performance of any product. Actual results will vary.
*Information gathered from the “Bureau of Labor Statistics” in the U.S. Department of Labor www.bls.gov/home.
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Highlander ® Fixed Index Annuity
Clear Spring Life and Annuity Company
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