1. Fixed Income
INCOME
OPTIMIZATION

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

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

4. 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

5. 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.

6. 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

7. 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.

8. 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.

9. 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.

10. 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