How Hank could use an indexed annuity

This is Hank. At 65-years old, he’s just retired. One of his long-term objectives is to provide a comfortable and financially independent retirement for himself and his wife. Or as he puts it, "to keep her in the manner to which she has become accustomed."

Issue
Since retiring, Hank has become very concerned about the safety of his money. He does not want to lose what he worked so hard to create. Also, Hank and his wife have grown accustom to a certain style of living and know that they will need to supplement their retirement income to keep it. Hank and his wife want a guaranteed stream of income that neither will be able to outlive.

Proposed Solution
Hank could purchase a fixed indexed annuity for him and his wife in joint ownership. An indexed annuity is a fixed annuity that has its interest credits linked to an index that will lock in interest earnings up to a stated cap every year that there is a gain in the index. Hank’s fixed indexed annuity would not participate in any negative index returns, protecting his annuity from any decrease in value (except for withdrawals and elective rider fees).

Using $100,000 from his accumulated retirement assets, Hank and his wife decide to purchase a fixed Indexed Annuity from Aviva called MultiChoice. To improve their flexibility in managing the accumulation and distribution phases of his annuity, he could choose to purchase the LifetimePay^SM Plus Rider. LifetimePay^SM Plus gives Hank control and flexibility – he decides when he takes income and for how long, all the while maintaining control of his fixed indexed annuity.

Results: The Accumulation Phase¹
By adding the LifetimePay^SM Plus Rider to their fixed index annuity Hank and his wife have given themselves extraordinary flexibility. They decide when and how they receive supplemental income. The longer Hank and his wife wait to receive Lifetime Income Payments, the more their total income payments will grow. Through the LifetimePay^SM Plus rider, Hank is guaranteed 7.2% compounded growth factor on the income benefit value. At that rate the income benefit value of his annuity will double to $200,423 in 10 years if he makes no withdrawals from his fixed indexed annuity.

Results: The Distribution Phase¹
As joint annuitants, Hank and his wife could begin receiving payments of 5% in year 1, about $10,000. But if they wait 10 years for the value to grow, their maximum annual withdrawal percentage will also be higher. After ten years, it would be 6%, or about $12,000 of guaranteed annual income for life.

How you could use an indexed annuity

Obviously you’ll be planning your retirement, and not Hank’s. This is simply an easy way to show you what’s possible with an Aviva indexed annuity. There are many benefits to an Aviva annuity beyond being a stable source of income for the rest of your life. A local Aviva professional agent can help you identify all the ways to make an Aviva indexed annuity work for you.

¹This hypothetical example assumes no Withdrawals, no additional Premium, and no restarts.

The above scenario, proposed solution, accumulation results and distribution results are a hypothetical example used for illustrative purposes only. Your Aviva agent can provide you with a projected income estimate based on your age and amount of Premium. This example uses values for MultiChoice IncomeTen^SM [form MCI10(06/06)] and LifetimePay^SM Plus rider [form MCAIRW (02/08)].

Aviva does not authorize its agents, employees or representatives to give legal, tax or accounting advice. The information contained herein is our understanding of the current laws as they relate to annuities. These laws are subject to change in the future. Please consult your personal advisor for any tax, legal or accounting advice to determine if a single premium immediate annuity or a deferred annuity is right for you.

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