Fixed Income INCOME OPTIMIZATION

“Retirees prefer guaranteed income over spending down assets, survey found.”

PCN Goal: Utilize insurance products and guarantees to allow for risk, not remove it.

Topics of Discussion Leveraging Fixed Income Optimization using an annuity with lifetime withdrawal benefits to allow for portfolio efficiency Reduce pressure from equity asset class

Portfolio Growth Age 60-70 Total Income is $39,404.90 Proportional Income Withdrawal(4%) = $10,751.30 Proportional Income Withdrawal(4%) = $28,653.60 Total Income is $39,404.90 This assumes a 6.00% average yield on the equity portfolio and a 3.00% yield on the fixed income portfolio.

What is the Goal? How? Leverage the fixed income dollars Satisfy a portion of Income with Guaranteed Lifetime Income. Allow more money to stay invested in equities Reduce the withdrawal percentage from the equity portion to allow longer market exposure, which will allow us avoid market sequence How? Leverage the use of a withdrawal benefit on an indexed annuity

Portfolio Growth Age 60-70 Total Income is still $39,404. Lifetime income = $22,000 Remainder from equities = $17,404 A 2.43% withdrawal from the equity position This assumes a 6.00% average yield on the equity portfolio and a 2.00% yield on the fixed income portfolio.

Illustrated Values Age Equity Value Yield Excess Withdrawals Withdrawal Percentage Non- Annuity $ FIA Value* GMWB Income Total Income 60 $400,000.00 6.00% $200,000.00 2.00% 61 $424,000.00 $204,000.00 62 $449,440.00 $208,080.00 63 $476,406.40 $212,241.60 64 $504,990.78 $216,486.43 65 $535,290.23 $220,816.16 66 $567,407.64 $225,232.48 67 $601,452.10 $229,737.13 68 $637,539.23 $234,331.88 69 $675,791.58 $239,018.51 70 $716,339.08 $17,404.90 2.43% $243,798.88 $22,000 $39,404.90 71 $740,870.23 $18,587.05 2.51% $226,234.86 $40,587.05 72 $765,620.17 $19,804.66 2.59% $208,319.56 $41,804.66 73 $790,564.45 $21,058.80 2.66% $190,045.95 $43,058.80 74 $815,675.99 $22,350.56 2.74% $171,406.87 $44,350.56 75 $840,924.95 $23,681.08 2.82% $152,395.01 $45,681.08 76 $866,278.50 $25,051.51 2.89% $133,002.91 $47,051.51 77 $891,700.61 $26,463.06 2.97% $113,222.96 $48,463.06 78 $917,151.81 $27,916.95 3.04% $93,047.42 $49,916.95 79 $942,588.95 $29,414.46 3.12% $72,468.37 $51,414.46 80 $967,964.96 $30,956.89 3.20% $51,477.74 $52,956.89 81 $993,228.56 $32,545.60 3.28% $30,067.29 $54,545.60 82 $1,018,323.94 $34,181.97 3.36% $8,228.64 $56,181.97 83 $1,043,190.49 $35,867.42 3.44% $0.00 $57,867.42 84 $1,067,762.45 $37,603.45 3.52% $59,603.45 85 $1,091,968.54 $39,391.55 3.61% $61,391.55 Hypothetical example only. Assumes 6% annual yield in equities and 2% yield in indexed annuity. Actual results will vary. *Surrender Charges would apply to early withdrawal.

Portfolio Growth Age 60-70 4% W/D from Equities Total Income increases to $50,653 Lifetime income = $22,000 Remainder from equities = $28,653 This assumes a 6.00% average yield on the equity portfolio and a 2.00% yield on the fixed income portfolio.

What is Next? Call your Producers Choice representative for a Income portfolio design. You will need Client’s current age Total portfolio value Estimated portfolio allocations Producers Choice 800.238.0448