We all have dreams of what we want our retirement to look like.

With the decreasing availability of pension plans, the uncertainty of Social Security and rising health care costs, it's more important than ever to create an income strategy to help ensure personal retirement savings can sustain a 20- to 30-year retirement. By answering a few questions, your clients can begin the process of creating an income strategy using fixed and variable annuity products that can help provide a guaranteed income stream to last throughout retirement.

 

BUILD AN

income strategy

Use  this short quiz to help your clients develop a strategy based on their individual needs and objectives for retirement income.
Start here

When does your client need income?

Soon - within 1 year

NEEDS INCOME…

Soon - within 1 year

Later - longer than 1 year

NEEDS INCOME…

Later - longer than 1 year

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Are they comfortable investing in the market?

Yes 

THEY ARE…

comfortable with investing

Somewhat comfortable

THEY STILL…

want some guarantees

No

THEY ARE…

not comfortable with investing

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Soon: Yes, your client is comfortable investing in the market.

So, your client is comfortable investing in the market. Great! 

Action: They may want to consider opening a variable annuity with a guaranteed minimum withdrawal benefit (GMWB)

This variable annuity may offer:

  • Ability to take advantage of potential market growth
  • Ability to add additional premiums
  • GMWB riders1 that may provide:

 

Income
soon

Income
later

Bonus2
 
✔

Step-up potential3
✔
✔

Investment protection4
✔
✔

Guaranteed lifetime income
✔
✔

 

1GMWB feature does not guarantee against loss in total value of the account. These losses can lead to lack of future step-ups in the Withdrawal Benefit Base. GMWB riders are subject to an additional fee. 
2Bonuses only apply during the guarantee period and are applied to the withdrawal benefit base and not the contract's accumulated value as long as no withdrawals are taken. Once a withdrawal is taken, the bonus is no longer applicable. 
3Once withdrawals have started, a step-up feature is less likely to occur.
4The GMWB rider provides investment protection. However, the accumulated value is subject to gains and losses. 
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Soon: Your client is somewhat comfortable, but they still want some guarantees.

Your client is somewhat comfortable investing in the market. Here's how we can help.

Action: They may want to consider opening both an immediate income annuity and a variable annuity

This strategy provides them with:

  • Ability to receive income now with an immediate income annuity to help cover essential expenses
  • Long-term growth potential with market participation with a variable annuity5
  • Some safety and security with a fixed annuity
  • Access to a portion of your money in the variable annuity without penalty via the free withdrawal amount (the greater of earnings in the contract or 10% of premium payments less any withdrawals since the last anniversary)

Bottom line: Your client has more than one option to create guaranteed lifetime income

5Investing involves risk, including possible loss of principal.
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Soon: No, your client is not comfortable investing in the market.

They're not comfortable investing in the market? Not a problem – we're here to help.

Action: Your client may want to consider opening an immediate income annuity

An immediate income annuity may offer:

  • Guaranteed lifetime income by converting a portion of your retirement savings into a guaranteed income stream without the worry of market fluctuations6
  • Diverse range of income options including fixed amount, fixed period; or life income with guarantee period, cash refund or installment refund
  • Optional no fee riders that allow you to increase income payments to potentially keep pace with inflation or to access money if needed7
  • Optional no fee liquidity rider, providing access to money if needed - up to 100%8
  • Optional no fee rider that can help with Medicaid planning9
6Lack of market fluctuation means both a lack of possible market loss but also a lack for opportunity for market gains.
7While there is no additional fee for the optional cost of living riders, payments for the same premium will be lower in the early years than contracts without one of these riders. 
8Income payments for the remaining guarantee period are reduced in direct proportion to the percentage of your withdrawal. Not available in all states and certain restrictions apply.
9Requires recommendation from an elder-care attorney. May not be available in all states.
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Later: Yes, they are comfortable investing in the market.

So, they are comfortable investing in the market and looking to invest with one year. They have two options (see both by scrolling right and left). 

Action: Your client may want to consider opening an investment focused variable annuity

This variable annuity may offer:

  • Access to more investment option than available with GMWB
  • Ability to invest 100% in equities
  • Ability to add additional premiums
  • May provide access to a feature that allows client to create a personalized income plan by transferring money from investments to lock in future guaranteed income

This variable annuity may offer:

  • Ability to take advantage of potential market growth
  • Ability to add additional premiums
  • GMWB riders1 that may provide:

 

Income
soon

Income
later

Bonus2
 
✔

Step-up potential3
✔
✔

Investment protection4
✔
✔

Guaranteed lifetime income
✔
✔

 

Action: Your client should consider opening a variable annuity with a guaranteed minimum withdrawal benefit (GMWB)

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1GMWB feature does not guarantee against loss in total value of the account. These losses can lead to lack of future step-ups in the Withdrawal Benefit Base. GMWB riders are subject to an additional fee. 
2Bonuses only apply during the guarantee period and are applied to the withdrawal benefit base and not the contract's accumulated value as long as no withdrawals are taken. Once a withdrawal is taken, the bonus is no longer applicable. 
3Once withdrawals have started, a step-up feature is less likely to occur.
4The GMWB rider provides investment protection. However, the accumulated value is subject to gains and losses. 
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Later: Your client is somewhat comfortable investing, but still wants some guarantees.

Your client is somewhat comfortable investing in the market. Here's how we can help.

Action: They may want to consider using a combination of a variable annuity with a guaranteed minimum withdrawal benefit (GMWB), a deferred income annuity, and/or an investment focused variable annuity

This strategy provides your client with:

  • The ability to add additional premiums to either product
  • Upside market potential with the portion invested in a variable annuity13
  • Some safety and security with a fixed annuity
  • Income start date flexibility with both products, based on your retirement income needs
  • The opportunity to defer the distribution of a portion of your qualified assets beyond age 72 - reducing RMDs until a later date (when a deferred income annuity is purchased as a QLAC)

Bottom line: They have more than one option to create guaranteed lifetime income

13Investing involves risk, including possible loss of principal.
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Later: No, your client is not comfortable investing in the market.

They’re not comfortable investing in the market? Not a problem – we’re here to help.

Action: Your client may want to consider opening a deferred income annuity

This deferred income annuity may offer:

  • Income start date flexibility - can defer taking income anywhere from 13 months to 30 years
  • Guaranteed future income stream for life
  • Ability to add additional premiums
  • Choice of income options including fixed period, lifetime (single/joint) including life only, life with guarantee period, cash refund or installment refund10
  • Ability to defer a portion of required minimum distributions (RMDs) up to age 85 when purchased as a qualifying longevity annuity contract (QLAC)11
  • Payment advancement feature that allows clients to advance up to six income payments and receive a lump sum12
10If purchased as a QLAC, income options are limited to life only and life with cash refund.
11QLAC premium is limited to the lesser of $130,000 or 25% of total IRA balances as of prior year-end (excluding Roth and inherited IRAs).
12Available after the income start date on non qualified contracts receiving monthly income payments only. Limited to four requests over life of contract. Must be at least 59 1/2 to exercise. May not be available in all states any other restrictions may apply. 
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Is your client comfortable investing in the market?

Yes 

THEY ARE…

comfortable with investing

Somewhat comfortable

THEY STILL…

want some guarantees

No

THEY ARE…

not comfortable with investing

« back

Important considerations

Annuities are long-term investments and can provide lifetime income via annuitization. There may be additional risks, fees and charges associated with variable annuities. Strategies shown here may not be suitable for all investors. You should consider your personal investment time horizon and income tax bracket, both current and anticipated, as these may impact your investment decisions. Your financial professional can provide you with additional product details and strategies to help meet your financial needs and goals. This is not a recommendation and is not intended to be taken as a recommendation. This material was prepared for general distribution and is not directed to a specific individual.
Not FDIC or NCUA Insured
May Lose Value • Not a Deposit • No Bank or Credit Union Guarantee
Not Insured by any Federal Government Agency

 

 

 

 

Before investing in variable annuities, investors should carefully consider the investment objectives, risks, charges and expenses of the contract and underlying investment options. This and other information is contained in the free prospectus, and, if available, the summary prospectus which can be obtained from your local representative or online at principal.com.

 

Please read the prospectus and, if available, the summary prospectus carefully before investing. There are risks involved with investing, including possible loss of principal. There is no assurance that the goals of the strategies described will be met

This document isn’t a recommendation and isn’t intended to be taken as a recommendation. This material was prepared for general distribution and isn’t directed to a specific individual.

 

For more detailed product information on products mentioned in this brochure, contact your financial professional.

 

The subject matter in this communication is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

 

Contract rider descriptions are not intended to cover all restrictions, conditions or limitations. Some riders are subject to additional charge.

 

Refer to rider for full details. Riders are subject to state availability.

 

Annuities are issued by Principal Life Insurance Company. Securities offered through Principal Securities, Inc. 800-852-4450, Member SIPC, and/or independent broker/dealers. Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392, principal.com.

 

Principal, Principal and symbol design and Principal Financial Group are registered trademarks and service marks of Principal Financial Services, Inc., a Principal Financial Group company.

 

Contract SF 779, SF 949, ICC14 SF 949, SF 968, ICC16 SF 968, SF 948/ICC14 SF 948

 

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