Worst Case Scenario
(Market goes down forever)

Denis, aged 65, invests $200,000 and would like to begin withdrawing income immediately. Regardless of the market value of his investments, Denis is assured of obtaining 5% of his investment each year for life, which in this example equals the amount of $10,000. This income will not decrease, even if the market value of his investments goes down to $0.

Market Peforms Well

Donna, aged 65, invests $200,000 and would like to begin withdrawing income immediately. Regardless of the market value of her investments, Donna is guaranteed to receive 5% of her investment each year for life, which in this example equals the amount of $10,000. This income will not decrease, even if the market value of her investments goes down to $0.

Income may be increased as a result of the automatic resets made every three years. In this example, the markets have performed very well and by the 15th year her portfolio has grown to $366,835 even after factoring in the withdrawals during this time. Donna is guaranteed to receive a minimum of $18,342 per year for life from this point on, and this amount may be increased if the value of her investments continues to increase.

Deferred Income

Deferred income refers to the situation that occurs when an investor makes a contribution but does not elect to receive income until a later date. Until then, the investor will be credited a notional 5% bonus to their Guaranteed Withdrawal Balance.

Bill, aged 49, invests $200,000 and does not wish to begin withdrawing income before January 1 of the year he reaches age 65. The Guaranteed Withdrawal Balance (GWB) used to establish the LWA is increased on December 31 by a 5% bonus. This occurs on each December 31 following the initial contribution (or transfer) to funds eligible for the GMWB. In this example, after the 15th year (i.e. as of January 1 of the year he turns 65), Bill is guaranteed to receive a minimum of $17,500 per year for life. In addition, this amount may be increased if the value of the investments continues to increase.

If Bill needed to withdraw an income before January 1 of the year during which he reaches age 65, he would be guaranteed to obtain a minimum of 100% of his investment capital over 20 years.