Longer Life Spans and Market Volatility Can Jeopardize a Lifetime of Saving

Reston, VA, [Dec. 14, 2004] - Saving money has always been a top New Year's resolution.  Now, for the aging baby boomers fast approaching retirement, their 2005 resolutions better include a way to make sure their hard-earned savings will be there when they need it most.

According to the National Association for Variable Annuities (NAVA), individuals need to understand the importance of insuring their retirement assets in the same way they insure their lives, health, homes, and cars.   Retirement savings are virtually irreplaceable as individuals approach or live in retirement, and Social Security was never intended to cover all retirement costs.  As such, Americans should consider an annuity as a means of insuring their retirement assets.  There are three key annuity insurance features every baby boomer needs to understand:

• Living Benefits - insurance unique to annuities that provides principal investment protection against losses, regardless of market performance. Example:

John invests $100,000 in a variable annuity and selects the guaranteed minimum income benefit (GMIB), guaranteeing 5 percent annual growth.  He makes no withdrawals or transfers.  At year 12, as a result of stock market losses, the variable annuity is valued at only $85,000.  However, by selecting the GMIB, John would have at least $179,585 to annuitize. 

• Death Benefits - insurance that provides that if the owner dies while saving for retirement, his or her beneficiaries will receive the greater of the amount invested or the policy's value at the time of death; enhanced death benefits allow market gains to be locked in periodically. Example:

Jacqueline purchased a $100,000 variable annuity with an enhanced death benefit that locks in the maximum anniversary contract value.  The variable annuity increased in value to $140,000 by year five.  In year six, however, a downturn in the market reduced the value of her annuity to $120,000.  Jacqueline died in year seven, without making any

withdrawals or receiving any annuity payments.  Her beneficiaries received $140,000, which was the greatest anniversary value at the time of her death.

• Annuitization - guaranteed income payments that cannot be outlived. Example:

Jerry retired at 65 and wanted to begin immediately receiving monthly retirement paychecks for the rest of his life.  With a portion of the proceeds from his 401(k) plan, he rolled over $100,000 into an immediate variable annuity.  Based on his selection of underlying funds, in the first year his income payments averaged $600 per month.  As the result of favorable investment performance, his monthly payments increased to an average of $800 in year three.  With a variable annuity as a component of Jerry's retirement plan, he has the security of knowing that the income payments will last for the rest of his life. 

"No one can understate the peace of mind that comes with insuring retirement assets," said Mark Mackey, president and CEO of NAVA.  "However, the insurance features of annuities go well beyond simply a feel good benefit.  They provide a host of real guarantees that can make the difference between just retiring, and retiring on your terms."

An annuity is a long-term retirement investment vehicle offering a combination of insurance benefits, guaranteed lifetime income payments and tax-deferred savings.  Variable annuities allow individuals to invest in a variety of underlying fixed and equity funds, and provide returns based on the performance of these funds.   Only annuities protect retirement assets against market volatility and guarantee retirement income that cannot be outlived. 

About The National Association for Variable Annuities (NAVA)
NAVA is a non-profit trade association located in suburban Washington D.C.  NAVA provides a variety of services to the industry including educational forums, research and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance.  NAVA also maintains and supports an educational website for consumers at www.RetireOnYourTerms.com.