Page 163 - Ready Set Retire

Ready. Set. Retire!

*Caps have fluctuated in the past three or four years with the prolonged
period of low interest rates. However, there are many crediting options
available that can maximize gains. Many of our clients are even now
enjoying returns of 5%-8%.

After year one it’s the S&P 500 is at 1100 for a 10% increase.
This is reflected in Figure 14. The investment starts at
$100,000. The FIA goes up by 7%, the full amount provided
by the cap. The investment fund (market) went up by 8.9%,
the index increase less the 1.1% fee.

During the second year the market fell by 10%. Now logically,
the investment fund should be showing even, but remember
there are fees charged...whether you make or lose money. Plus,
the 10% loss was on the full amount, not just the original
$100,000. Therefore the investment fund is now in negative
territory at $97,030, but the FIA is still showing $107,000 due
to the annual lock-in. Now the market goes up 10% again in
year three. The investment fund starts at $97,030, goes up 10%
(minus 1.1% fees) and ends up at $105,762. But the annuity,
because of the annual reset, starts at $107,000. So even though
it only gets 70% upside, it got NONE of the downside and is
way ahead of the market.

Now you are off and running. The investment fund will have
a very difficult time ever catching up with the annuity.

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