Modern investments combining tax-deferral and growth opportunities

How Comfortable Will Your Retirement Be?

Planning for a comfortable retirement can be a considerable challenge. Today, many of us face caring for aging parents, mortgages and supporting college costs. In addition, Social Security, IRAs and individual pension plans often need to be supplemented in order to meet your retirement goals.

This pie chart shows the proportion of total retirement income from five different income sources. The largest share is from Social Security at 39%, followed by earned income at 24%. Pensions and retirement savings plans make up 18%, while personal investments and savings account for 16% of total income. Total income received from miscellaneous sources is 3%. Two startling realities are revealed in this chart:

1. Social Security comprises only 39% of retirement income.
2. Almost a quarter of retirement income is earned after retirement.

What Are Variable Annuities?

Variable annuities can provide a solid foundation for building a personal retirement strategy through investment income and tax advantages while providing the insurance protection of a guaranteed death benefit. These components give you the flexibility to structure your retirement savings to meet your unique situation.

With a variable annuity, you choose from a range of professionally managed investment portfolios. Your investment return reflects the overall performance of the portfolios you select, making your return subject to market fluctuations and the possibility of loss of your initial investment dollars. Your return is not subject to taxation until withdrawal, nor are you taxed on transfers between portfolios.

To protect against outliving your income, variable annuities provide income options that can spread taxation over a lifetime. Also, they often provide investment value protection by offering guaranteed death and living benefits. The death benefit guarantees investment amounts for your beneficiaries, while living benefits protect investment amounts or guaranteed payments. Both are backed by the claims-paying ability of the issuing company.

Note: A surrender charge is generally imposed during the first five to seven years that you own the contract. Withdrawals prior to age 59 1/2 may result in a 10% penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company. The investment sub-account value will fluctuate with changes in market conditions.

Why Variable Annuities?

Many people choose variable annuities to help accumulate dollars, on a tax-deferred basis, for use at retirement or another future date. Variable annuities can be easily purchased through the brokerage services available at your financial institution or through your investment executive.

Features of Variable Annuities

• Flexibility: Most variable annuities offer a broad range of investment objectives among their portfolios. You can choose from relatively conservative funds with a lower level of risk, to more aggressive investment portfolios with a higher degree of risk but the potential for higher investment returns. Your financial professional can help you choose the appropriate mix for your needs.

Furthermore, as your needs change, you typically can transfer money within the annuity from one investment portfolio to another, without tax consequences or fees. Refer to the prospectus for more information.

• Tax-deferred Accumulation: All interest, dividends and capital gains are automatically reinvested and grow tax-deferred until you begin taking withdrawals. This method of accumulation allows your money to grow faster than a taxable investment earning the same rate of return.

However, lower maximum tax rates on capital gains and dividends could make the investment return for the taxable investment more favorable, thereby reducing the difference between taxable and tax-deferred investments. Investors should consider their personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision, as these may further impact the results of their investment.

• Protection for Your Beneficiaries: A variable annuity’s basic death benefit feature protects your beneficiaries in the event of your death. Your beneficiaries are guaranteed to receive at least the amount you contributed, should you die before you begin to receive payments from your annuity contract. Many of the variable annuities available at your financial institution or through your investment executive offer enhanced guarantees. These optional death benefits may increase the amount your beneficiaries receive.

• Professional Money Management¹: You choose from a variety of investment portfolios, professionally managed by qualified portfolio managers.

• Minimum Investments: Because there are no commissions to pay up front, 100% of your money goes to work for you right away! You can start this investment program with as little as $1,000. Additional contributions of as little as $25 a month can be made by check or by electronic transfer.

• Premium Enhancements: Many of the variable annuities today credit investors on their initial contributions and ongoing contributions. These payment enhancements are generally based on a certain percentage2, such as 2%, 3% or 4% of a contribution, and are normally added as earnings to the contract. Use of enhancements may trigger a longer surrender period or increase fees.

• Diversification¹: You may personalize your portfolio with choices ranging from conservative to aggressive growth investments. Your financial professional can recommend an appropriate asset allocation strategy to meet your risk tolerance and time horizon. Keep in mind that your annuity’s value will vary over time, according to the performance of the individual investment portfolios that you choose.

• Access to Your Money: A variable annuity is a long-term investment, which contains a contract penalty for early withdrawal beyond a specified amount for a specified period of time. In addition, withdrawals prior to age 59 1/2 may be subject to IRS penalties.

• Tax-Free Transfers: You can transfer between investment portfolios (variable investment options1) within an annuity without paying taxes. These adjustments can be done on an automatic basis or periodically to meet your unique investment objectives.

• Guaranteed Income for Life: You decide how to receive income payments. Payout options include receiving a lump sum, payments at regular intervals for a set time period or a guaranteed income stream for the rest of your life. This guarantee is based on the financial strength and claims-paying ability of the issuing insurance company.

• Minimum Income Protection²: This optional, innovative enhancement to recent variable annuities allows a guaranteed minimum income distribution for life, while still participating in market growth. This gives the potential to increase the guaranteed minimum amount.

• Avoid Probate: Allow your beneficiaries to receive their proceeds directly, avoiding the public information, expense and delays of probate.

• Impact on Social Security Benefits³: Income from annuities, unlike wages and salaries, does not result in any reduction of Social Security benefits.

• Fees and Expenses: Please consult with your financial professional and the prospectus regarding fees involved (such as mortality and expense fees, sub-account expenses and other charges). A prospectus may be obtained from the variable annuity company or your investment executive.

Realize that withdrawals prior to age 59 1/2 may be subject to a 10% penalty imposed by the IRS, and the amount withdrawn is subject to ordinary income tax. Check with your tax advisor for details.

Variable Annuities: A Valuable Asset to Your Investment Portfolio

Variable annuities allow you to:
• Defer paying taxes until you begin taking distributions;
• Take advantage of market opportunities;
• Help enhance the quality of your retirement;
• Receive monthly or yearly income that you cannot outlive; and
• Ensure that your beneficiaries receive the full value of your annuity on a timely basis.

Discover How Variable Annuities Can Help You Achieve a Well-Deserved, Comfortable Retirement

How Do I Get Started? Talk with a financial professional to see how an annuity may help you meet your long-term financial goals.

Investors should consider the investment objectives, risks, charges and expenses of the variable annuity carefully before investing. For complete information, including fees, charges and expenses, please refer to the prospectus. Investors may obtain a prospectus from the variable annuity company or your investment executive. The prospectus should be read carefully before investing.

¹ These variable investment options are available only in variable life insurance policies and variable annuity contracts issued by life insurance companies. They are NOT offered or made available to the general public directly.
² Subject to state availability.
³ May vary according to state law.