Income in the future for retirees will be a problem. Studies show that 80% of our retirement income will have to be generated from personal savings. A variable annuity can help with this problem.

We are in the wave of baby boomers retiring over the next 10 years. That is 77 million people looking to retire! What is going to be their source of income? Will it be from Social Security? No, that will be a supplement to their income. Their retirement income will be generated from their 401(k)'s or IRA's. There are few to no pension plans available anymore.

What can all these retirees turn to for help? How about a Variable Annuity with a For-Life living benefit? These are the newest type of living benefit is the For-Life benefit. This will guarantee the owner of the contract a certain percentage of withdrawal, usually 5% annually, for the rest of their lives. Jackson National was the first to roll out this type of program with many companies following suit.

Basically, you invest your money and you can take out that 5% a year until the day you die. Even if your account goes to zero, you will still get that 5% withdrawal for as long as you live. It is pretty amazing that they rolled out with these benefits. Prudential just launched a new version of this type of benefit that will guarantee that withdrawal for both the owner and the spouse of the contract for as long as each one lives individually.

Now, the old way of thinking about retirement income was one of two options:

1. An immediate annuity, this option stinks. You are locked into getting those payments forever. The payments are fixed and they never vary. That is a problem, because inflation is very real and will make today's dollar weaker against tomorrow's dollar.

2. Your second option was an income portfolio. This usually consisted of two asset classes: bonds and income producing stocks. The upside is it provides some inflation protection and can provide a nice amount of income, if structured right. The downside is bonds mature and depending where interest rates are you will never be sure about what your yield will be. The stocks will fluctuate and so will your income.

You now have a third option, a Variable Annuity with a For-Life benefit. You can get 5% as long as you live regardless of market performance. Now, imagine that your investments grow in value. Many of these For-Life benefits may have a step-up provision in them. If your account value grows you may, if available, step-up your benefit every 3 to 5 years. With every lock-in you are guaranteed that 5% withdrawal from the new value.

What better way to insure your income? No other product can match that benefit. Yes, there is a downside to all of this it will cost you money to have this benefit. The average cost, including the average fund expense, is about 2.8% annually. That charge includes the M&E cost as well. Given the fact that you can never outlive your income and have the possibility of market growth, I believe this out weighs the cost.

Most people have not saved enough money for retirement, this is a fact. Most people are going to depend on their savings for the bulk of their retirement income, this is a fact. Why in the world would you not consider a guaranteed investment that does not involve annuitization and has the upside potential of the market?

There is no good reason to ignore these facts. People will say over the long term no one has lost money in the market. That statement is not true; I know plenty of people who lost lots of money in the market. Why don't they

talk to people who retired in 1999 with millions in their 401(k) plan? They won't because those who had millions do not have millions any more. With market loses and the taking of withdrawals to provide them with income their accounts have been devastated.

You can try to circumvent this argument by saying historically the market has returned 10.9% annually. Again, even though this is technically correct, it is misleading. That statement makes people assume that the market always has positive returns. The market goes up and down and the reason people can say it has returned 10.9% is largely due to two decades, the 1980's and the 1990's. If you exclude those decades the rate of return goes way down. Keep in mind that Ibbotson's has readjusted its forward rate of return of the market to about 9%.

These experts also have not calculated the fact that when these 77 million people retire they will be withdrawing money from the market, not adding money to the market. That fact alone will draw hundreds of millions of dollars out of the stock market to help people pay for their retirement. This will create selling pressure. Don't get me wrong, the market will still have very good years, I just think it will be much more volatile than it ever has been in the past. This volatility is why the argument for protection of your investment is valid.

Let's talk about withdrawals. When people started with early retirements in the 1990's they felt comfortable taking out 10%, mostly because they made it back in the market. When the bubble burst that 10% withdrawal killed their accounts. Now most experts are saying that a 6% or 7% withdrawal from your investments is very aggressive. The general consensus is that a 4% or 5% withdrawal amount will have to be sufficient.

A 5% withdrawal will have to be sufficient? Retirement income will have to come from your own savings? A Volatile stock market? People are living longer? With all these questions, there is but one answer; a Variable Annuity with a For-Life benefit. It almost answers all those questions; it is the closest thing we have to a "perfect fit”. No financial advisor or planner can guarantee what these new variable annuity features can provide. When we add up the fees are they high? Yes, but are they worth it? Absolutely.

Hey, a fee-based planner can charge 1% to 3% on top of the mutual fund expenses and feel good about it and offer no guarantees and everyone says its ok. Then you have an insurance company that charges 2.8% and guarantees you 5% for-life and that is considered criminal? I have to say give me a break. So where can you turn to find the best For-Life benefit? Get The Annuity Report at http://www.annuityiq.com.

Get the facts, before you invest.

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