Variable Annuities
How to Pocket an Extra $1,250 a Month - For Life - Guaranteed
Nearly one-third of baby boomers ages 51 to 61 are at risk of running out of money. Yet 72% of workers polled are confident that’s not the case… and aren’t taking steps to prevent it.
Big mistake…
- The average Social Security check is just $998 a month.
- Healthcare costs are estimated to run you around $200,000 throughout retirement.
- Experts suggest you could need as much as 125% of your current income to enhance your lifestyle in the post-work life.
Even if you’re maxing out your 401(k), taking advantage of Uncles Sam’s special IRA “catch up” provisions (for those over 50) and contributing monthly to your IRAs, it still might not be enough…
Millions of Americans may soon have second careers, and not by choice. Fortunately, you don’t have to be one of them…
Variable annuities (VAs) can virtually guarantee you’ll never run out of money. They give you an income stream you can’t outlive, and an annual “pay raise.”
Here’s how they work…
Variable Annuities: Safely Double Your Money… With Stock-Like Returns
A paycheck for the rest of your life sounds pretty good. And that’s exactly what you get with a Variable Annuity.
VAs are hybrids of investment and insurance products. You pay into the “contract” for a set period of time… then begin periodic withdrawals at a predetermined date in the future. You’ll keep receiving these payments for the rest of your life… no matter how long you live.
And the good news is that the conventional drawbacks to Variable Annuities - high fees, locking up your money, low payouts - are now a thing of the past.
A new breed of VAs has emerged… and they’re more flexible - and profitable - than ever. Even experts who’ve been critical of these products are changing their tune…
As Moshe A. Milevsky, PhD., professor of finance at York University, wrote in his recent article “Confessions of a VA Critic” (published in January 2007’s Research Magazine):
“In the last few years that I have been observing this industry, I am seeing an enormous shift in the way VA policies are being designed, priced and marketed to the public… I can no longer claim that you are being overcharged for these guarantees or that you can achieve similar goals at a lower cost…”
Variable Annuities now offer locked-in quarterly earnings and guaranteed minimum interest rates… at a significantly lower cost.
While Wall Street sorts out the credit mess, a slumping dollar and shrinking corporate earnings, now’s a perfect time to explore these ultra-safe options for your “back of the vault” money.
Variable Annuities: Unlimited Upside… And Guaranteed Minimum
Variable annuities offer a range of investment options. Stocks, bonds, REITs… and just about every blend of these assets classes. VA portfolios can be broadly diversified, just like a regular stock and bond portfolio. The only difference is that you’re also getting some insurance against your funds.
One of these “new breed” variable annuities is from ING…
With ING’s VA, you can lock in your gains on a quarterly basis. It’s sometimes called the “high-water mark.” Basically, once every three months, ING will take a snapshot of your balance. If your VA is worth $75,000 at that moment in time, that’s your high-water mark. The value of your VA will never be worth less than $75,000… even if the market (or whatever assets you’ve invested in) tanks.
Better yet, this annuity offers a guaranteed minimum return of 7%.
So at a minimum, you’ll double your money in 10 years, even in a down market. (Just use the rule of 72, which says if you divide your annual rate of return into 72, you’ll get the number years it will take to double your money.)
Of course, if the market performs well, there is unlimited upside.
Figure the average stock-market return has been 11%. If your investments outperform the 7% guaranteed rate, you’ll have more than doubled your money. Here’s another way of looking at it…
When it comes time to withdraw from your annuity, you’ll get the highest of three values: the 7% guarantee, the market earnings or the locked-in rate of your portfolio.
Let’s say this number is $300,000. Withdrawing 5% a year gives you a guaranteed income of $15,000 annually - or $1,250 a month - that can never go down. If the market performs well, you could even get a “pay raise.”
¼br> Your age at the time of your initial withdrawal is another factor that determines your payout amount. In most cases, the longer you wait to withdraw, the better. The older you are, the more you’ll be able to take each month.
In short, your principal never goes down, and your income is guaranteed. And if you stay within the terms of the contract, you can count on this investment for the rest of your life.
How to Buy a Variable Annuity
When shopping for the right variable annuity, seek out A+ rated companies. That’s because VAs are backed solely by insurance companies.
Keeping fees to a minimum is also critical. And depending on your age and specific needs, some variable annuities might be better suited for you than others.
Where can you find today’s best VAs? Variable Annuities must be bought through a registered broker-dealer. So you’ll have to ask your financial advisor about them. Or you could just call Jeff Winn…
Jeff’s one of our asset protection and income strategists, and he’s the Director of Retirement and Estate Planning with International Assets, LLC. He’s a longtime retirement planner in Florida, and he knows VAs inside and out.
To get more information about the ING product mentioned here, or any other VAs, you can call Jeff directly at 800.432.4402. He’d be happy to help. You can also email him at jwinn@iaac.com, or visit his company’s website.
~ Lynnsey Eakin and the Investment U Research Team
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