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Lifetime Income Discovery Experience
Why is it important to discuss?

A main concern for retirees is ensuring that they don't outlive their retirement portfolio.

The percentage of withdrawal from your portfolio and the investment return your portfolio experiences will impact how long your portfolio will last.

Next Steps
  • Get an understanding of your income needs in retirement.
  • Explore options that could provide predictable guaranteed lifetime income payments to mitigate risk of outliving your portfolio.
How to Use:

This discovery experience demonstrates how long your portfolio (blue pixels) would last based on the annual investment returns and withdrawal rates. Additionally, it also demonstrates how long your portfolio would last if a percentage of the portfolio was converted into a guaranteed lifetime income product (green pixels). Tap the Portfolio Return Average to illustrate different rates of investment returns for your portfolio. Similarly, tap the Inflation Average to select different inflation values. The withdrawal rate can be changed to 3%, 4% or 7% by sliding the Annual Withdrawal Rate button.

Slide the blue age button on the timeline (age 65 up to 100) to illustrate the drawdown of your portfolio, assuming a starting portfolio value of $1 million up to $3 million.

The projected benefit values shown are based on hypothetical and generic situation and are not based on a specific client's real information or situation.

Click on settings (gear icon) to change other attributes such as Portfolio Beginning Balance, Percentage of assets converted into Lifetime Income, Annual or Monthly Income and nominal (selected inflation rate applied) or real (income without any inflation applied) for Display of the Income.

Beginning at the age of 65, the experience calculates potential income received through the age of 100, as appropriate. Once the Total Assets are depleted based on the calculations, the funnel will empty and the Accumulated Assets become $0.

Once the Lifetime Income option is turned on, the Total Assets displayed are Accumulated Assets as well as the Assets Converted into Lifetime Income. The Accumulated Assets will calculate as described above. However, the Assets converted into Lifetime Income are displayed and remain in the funnel as a representation of Assets converted into hypothetical Lifetime Income.

The projected income values shown are based on a hypothetical example only and are not based on any client's information or situation.

The reset button at the top can be clicked to reset the screen back to the default view.

Glossary of Key Terms

Nominal dollars - Nominal dollars are values expressed in dollars not adjusted for inflation.

Real dollars - Real dollars are values expressed in dollars adjusted for inflation.

Important Disclosures and Assumptions

This discovery experience should be regarded as educational information on how lifetime income products work, and is not intended to serve as the basis of any investment decisions. It provides general information and illustrations for discovery and discussion purposes only. If you have questions regarding a particular investment scenario, please contact professionals that specialize in that area.

The experience assumes the individual is retiring at the end of the year they turned 65. The Portfolio Return Averages that can be selected are applied to the Accumulated Assets.

The Portfolio Average Return values are only examples for discussion purposes and do not reflect any actual account performance. Actual portfolio returns will vary based on market conditions and other factors.

Withdrawal rates are examples only and are applied to determine potential Annual or Monthly Income as calculated based on the Accumulated Assets. It is assumed the individual will spend their distributions as received.

The Inflation Average percentage values are examples only and are used to demonstrate how potential Accumulated Assets may be impacted with inflation once an individual is in retirement, decreasing the value of assets over time.

The Assets Converted into Lifetime Income represented are based on the hypothetical purchase of a Single Life, Lifetime Only Single Premium Immediate Annuity for a Male age 65 with an assumed annual payout of 6.06%. This percentage represents an average payout for a male age 65 based on four annuity carriers as of December, 2019. It is important to understand that payout rates vary by gender, and that the rates at the time of annuity purchase may be higher or lower than those illustrated in the Application.

The Assets Converted into Lifetime Income represented are based on the hypothetical purchase of a Single Life, Lifetime Only Single Premium Immediate Annuity for a Male age 65 with an assumed annual payout of 6.06%. This percentage represents an average payout for a male age 65 based on four annuity carriers as of December, 2019. It is important to understand that payout rates vary by gender, and that the rates at the time of annuity purchase may be higher or lower than those illustrated in the Application.

All annuity contract and rider guarantees, including optional benefits and annuity payout rates, are backed by the claims-paying ability of the issuing insurance company. They are not backed by Merrill or its affiliates, nor do Merrill or its affiliates make any representation or guarantees regarding the claims-paying ability of such insurer.

The Average Annual Return values are examples for discussion purposes only and do not reflect any actual account performance. Actual portfolio returns will vary based on market conditions and other factors. Past performance is no guarantee of future results.

Equity is represented by the S&P 500 Index, which is a custom unmanaged index designed to measure the performance of the stocks within the S&P 500 Total Return Index (a capitalization-weighted index calculated on a total return basis with dividends reinvested that includes 500 widely held common stocks).

Fixed Income is represented by ICE BofA US Broad Market Total Return Index. The ICE BofA US Broad Market Total Return Index tracks the performance of US dollar denominated investment grade debt publicly issued in the US domestic market, including US Treasury, quasi-government, corporate, securitized and collateralized securities.

Cash is represented by ICE BofA U.S. Treasury Bills 3 months. The ICE BofA US 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, three months from the rebalancing date. To qualify for selection, an issue must have settled on or before the month-end rebalancing date.

Indices are used for illustrative purposes only, are unmanaged, include the reinvestment of dividends, and do not reflect the impact of management or other fees. Indices do not represent actual individual accounts. The fee assumptions are as follows: U.S stocks: 1.5%, U.S bonds: 1.1%, U.S cash: 0.5%. Investors cannot invest directly in an index.

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