In reality, the guaranteed returns refer to the income base, which does not have a cash value, but is used to calculate the guaranteed withdrawal amount. My advisor has suggested Jackson Mutual. Most insurance companies can not offer that combination of protection, I looked everywhere. You will be subject to capital gains if you have held stocks or bonds for over 1 year and your money is in a taxable account. Of course, some periods will be better, some worse. By no means do I think an all stock portfolio is the best way to invest, its really isnt. And yet, one major life insurance company that still allows policyholders the ability to go all in and doesnt seem to have any plans to rein in the practice is Jackson in its Perspective II Variable Annuity with a Freedom Flex rider. Unfortunately, thats really the only way to understand how they work. Safeguard what matters most with a range of death benefit options designed to prepare your legacy wishes and protect your loved ones. I self-directed my 401K and was very happy with the return. 1). Thanks for the comment, check your inbox for an email from me. My mentor, the principal of our firm weathered the storm with his clients (he really just saw it as a time when all stocks were on sale for bargain basement prices), but I cant really see how all of this pertains directly to this annuity review. I want to roll over my 401K and get a monthly income from it. The model in the review uses the S&P 500 subaccount for a total of 0.59% in expenses. Here are the expenses for the various income rider options: For the purpose of this review, I chose the LifeGuard Freedom Flex with 7% Bonus and Annual Step-Ups optional income upgrade, which has 1.50% in additional fees. Hi, I just retired at 56 with TSP and I will also be selling my home. If the withdrawals are 5% or less each year, the income base and death benefit would never decline. Jackson works with vendors and other partners to help deliver online and mobile advertisements for Jackson that we think may be of interest to you. Because it is a variable annuity, it acts as a bucket into which you put your money. Im not familiar with anyone in that area so if you would like to work with someone locally I suggest you check out the NAPFA planner search or search the CFP website for fee-only advisors (click advanced search to get more options, including the preferred method of compensation). Like all annuities, investors looking to purchase the Perspective II are typically doing so for the features that an annuity offers that may protect against downside risk. Past performance . 1.) In your second point you mention not everyone will be 100% in the S&P 500, which is true. The Funds file a complete schedule of portfolio holdings with the SEC for each quarter. I think I bought it when the market was at a low so I am sure that helped tremendously with its performance, about 60% higher in that time. Supposedly protects your money from market downturns and when it is flat by giving you a bonus. Well, this is mt 2 cents. Jackson has over 90 investment options to choose from and does not limit you. While this sounds fantastic, its interesting to see how it might play out in reality. So, I was not advising clients during the financial crisis. Jackson National Perspective II Lifeguard Freedom 6 Net Having the freedom and flexibility to control your savings and investments can help you to guide your portfolio towards your specific financial goals - both now and in the future. Changing annuities will reset the amount of time you must wait before you can annuitize and reap all of the benefits of the return guarantees. Please read the prospectuses carefully before investing or sending money. The guaranteed 7% is not applied to the surrender value and is only used to calculate the amount you could take as income. Its Perspective II Flexible Premium Variable & Fixed Deferred Annuity, a variable annuity, was the top-selling deferred annuity, for all channels combined in overall sales for the fourth consecutive quarter. I started 2 1/2 years ago with a little over $100,000 and am up to $143,000. My question is, if one is 10 years from retirement and accessing the money, why would an annutity not be a good idea with a plan to close the account, once there are no surrender charges and walking away with the guaranteed 7% growth? This tool lets you experience firsthand the combined power of Jackson performance and Morningstar analytics to help you stay on top of your investing goals. Its difficult to say whether its a good choice for anyone without knowing their situation. Sign up now for the newsletter and receive a free copy of the exclusive 4-part video course: How to Protect (And Even Grow) Your Portfolio In Any Market. Not that I wasnt already having second thoughts for about a year. The latest maturity date or income date allowed under an annuity contractis age 95, which is the required age to annuitize or take a lump sum. In this section were going to break down how much value that Income Rider really gives you. What are your thoughts on the Elite Access VAs from JN? This is quite the constraint, and if this trend continues might eventually negate the entire raison dtre of the GLWB which is insurance against market shocks. 5.) Thank you for all the work you have done on this product, but I believe you could write it up differently, considering the death benefit feature, especially for old folks like me, who could well be living for another 20 years. Thats not exactly the insurance companys fault, its just that the products have so many moving parts its often difficult to tell how they work. Annuities have a place in some investment strategies. All names, marks, andmaterials usedfor this review are property of their respective owners. Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Someone who is in the market for an annuity like this one should be using it for income. I didnt write this article to evaluate its potential as life insurance, I wrote it to evaluate its ability to provide an income stream while maintaining exposure to the market. I have pressed him on these points, and both he and his manager have confirmed what I have stated here. You cannot make a lump sum withdrawal of the income base, only the value of the underlying value of the subaccounts, which are not increased by the bonuses. Since its inception, this company - which began as a family-owned entity in Lansing, Michigan - has grown into a multi-billion dollar insurance carrier. As with all annuities, they work very well doing some aspects and poorly at other aspects. The Form N-PORT may be reviewed and copied at the SEC's Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. Does a 15 year accumulation change it at all? Thus, if you so desire, you can allocate the entire premium to a Small Cap Index Fund, say, or the International Index Fund. 2) In your Video you talk about 20 yr & 30 year terms, is this after the 10 accumulation phase, if so how are the results affected by a 15 year accumulation phase. One critical difference between what he has told me and what you state in your video is that the guaranteed growth that is provided during the accumulation phase(5%, 6%, or 7%, depending upon the option selected) applies to not only the income base but also the account value (the GMWB and the Contract Value, in Jacksons terms), as well as the death benefit. The fees are what they dont tell you about. How many familys were relying on you to help them avoid losing all their money? This review is meant to show you the strengths and weaknesses of the Jackson National Perspective Advisory II. Jackson issues other annuities with similar features, benefits, limitations, and charges. That is NOT a fair calculation comparison. The cost of these benefits may negatively impact the contract's cash value. I am gonna give you the benefit of doubt, and and save you the time of explaining how the sub accounts dont have a long enough track record to fit in your projections, but to say your analysis is misleading is putting it VERY lightly. 2. The Funds' Form N-PORT is available on the SEC's website atwww.sec.gov or at connect.rightprospectus.com/Jackson. I am 62 and want to retire. I am not sure about 6% everybody are talking about. Most people buy annuities based on the mouth-watering 6-8% returns with no downside risk, so for those individuals, it probably isnt a good fit. So it only offers downside protection for your future income stream, not for the. Also, at most reputable firms: Merrill Lych, UBS, WellsFargo, Morgan Stanley, Smith Barney, most advisors dont get paid 7% in fees either, they typically choose 1.5-2%% upfront with a 1% managed option to supervise the investments. I wouldnt add my management fee to a stock portfolio that was 100% invested in the S&P 500, as you could easily do that yourself with a brokerage account. But want to stop working at 63. Determine if it fits your risk tolerance, your time horizon (these types of variable annuities are typically held for ten years before you take an income), and the alternatives. This is due to the fact that the guaranteed bonuses stop after 10 years and the retiree is 65 in my example. Younger investors do not have the lifetime guarantee active until they are at retirement age. Check outthese videos to learn more about how our annuity products can help you prepare for your retirement. A 100% allocation to the S&P 500 isnt worth 2%, its worth the 0.05% that several ETF providers charge for an ETF invested in that index. Please, consult a properly licensed professional should have specific question about how this product can fit into your individual financial circumstances. Preparing for market ups and downs with an add-on benefit may help protect what you've earned and generate lifetime income. Now I dont think these advisors and salespeople are bad people for not explaining these annuities like I did for you in the video. The annuity will continue to pay out its guaranteed income after it depletes the cash value of the account, but it simply depletes the cash value faster than usual during recessions, so the likelihood of increased step ups after the bonus period is low after a portfolio experiences a recession in the early years of the contract. This is a 100% S&P 500 allocation to help maximize the benefits of the income rider. With legends of clients jumping off of buildings and people having lost everything in failed banks in 1929, what is the likelihood that your client continued to pay a 2% management fee and stayed in a 100% stock portfolio after continuous successive market losses? BUT, what is the catch? They roll it into an IRA, and have additional liquidity to bridge them until then, using after tax money. The Funds' Form N-PORT is available on the SEC's website atwww.sec.govor atconnect.rightprospectus.com/Jackson. So now well go over fees, and after that Ill show you the break down and stress test of the annuity. Since the total fees of my Vanguard Total Stock Market Admiral shares is 0.05% (not a typo), I see no advantage to paying 3.3% or more to Jackson for some guarantees. Ill take the money instead. And you are not see the fees. At age, 65 I will be able to withdraw 5%. During boom times the annuity will increase by market minus the fees, which amounts to premiums for the income insurance you receive during bust times. Jackson offers fixed annuities as a conservative option for growing your nest egg without exposing your assets to stock marketvolatility. Jackson National Lifes Perspective II Variable Annuity with the LifeGuard Freedom Flex rider offers all the standard features one expects from a Guaranteed Lifetime Withdrawal Benefit, but in addition offers the flexibility to invest your deposit premiums across a range of asset classes without restrictions. The fact that the death benefit would never go down puts a large future value in the income stream (albeit for the beneficiary), which would change the total return significantly. Jacksonissues other annuities with similar features, benefits, limitations, and charges. The income never goes down because its always based on the highest value that the income base has ever been. If you think you will maintain your lifestyle with the FAKE 5% guarantee rate of return let me tell you that you are going to be very disappointed with the real truth behind all these income rider and fake guarantees. Thank you for such a refreshing explanation. Perspective II Variable and Fixed Annuity (VA775, VA775-CB1, ICC18 VA775, ICC18 VA775-CB1) is issued by Jackson National Life Insurance Company(Home Office: Lansing, Michigan). An annuity with an income rider is not an accumulation tools. Therefore we should maximize the utility of the portfolio insurance, which is the protected income balance (also called guaranteed withdrawal balance or guaranteed benefit balance all of these largely refer to the same balance) of the annuity, which is separate from the money you can walk away with, the surrender value of the annuity. As demonstrated in the video, in many periods the withdrawals increase to some point and then never increase again because the portfolio cannot keep up with withdrawals. Your are spreading fear and pretending to be a throrough analyst. Back in the good old days, VA policyholders could pick from a rich variety of risky funds, to basically select any asset allocation a mix of stocks and bonds and then decide whether they wanted to protect their lifetime income by purchasing a stand-alone rider, the GLWB. In the video I use an excel model of this annuity to break down the returns a 65 year old investor could expect to have. Based on my tests a 15 year accumulation phase tends to decrease returns from the GMWB rider over 20 and 30 year periods because you wait longer to annuitize and therefore it takes longer to breakeven. Additionally you will lose any protected income balance you currently have in your Hartford account because these are separate from the annuitys cash value. Unfortunately, thats really the only way to understand how they work very well doing some aspects and poorly other. My example additionally you will lose any protected income balance you currently in. 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