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Guaranteed Retirement Income for Two Lifetimes

September 2016

A new income solution can help eliminate a difficult compromise for married couples seeking a more secure retirement

Variable annuities with a guaranteed lifetime withdrawal benefit (GLWB) remain a popular option for a retiree looking to turn a portion of his or her assets into guaranteed income for life. Investors purchased more than $1.5 trillion worth of variable annuities between 2006 and 2015.1 But these solutions become more complicated when a married couple is seeking income that will last for both of their lifetimes.

GLWB riders typically require married couples to make a painful compromise. Choosing joint-life coverage often may mean less income, as joint-life payout rates are typically 25 to 50 basis points lower than the single-life rate. It’s not surprising, then, that 76% of annuities with living benefit riders purchased since 2001 are set up to provide income only for a single life.

However, trying to maximize withdrawal rates by choosing single-life coverage is also a trade-off, because it exposes one spouse—usually a wife—to the risk of financial hardship in the event of their partner’s death: About 72% of women over the age of 85 are widowed, more than double the rate of men over the age of 85 who have lost a spouse.3 And because GLWB single-life income payouts stop with the death of the annuity owner, the surviving spouse is left to inherit only the annuity’s account value or death benefit—which could be depleted from years of withdrawals. 

“For years, advisors and their married clients had to compromise when trying to provide guaranteed lifetime income to both spouses,” says Myles Lambert, Senior Vice President – Head of Distribution and Marketing, MetLife U.S. Retail. “But compromising creates uncertainty around the key question most couples have about their retirement: Will they have the income they need?”

Now, there’s a retirement income option that can help married couples plan for a more secure retirement without making a trade-off. A MetLife variable annuity with the optional FlexChoice living benefit rider can help your married clients get the income they want and the flexibility they need.4 Here’s how FlexChoice can help couples avoid compromises when seeking guaranteed income for two lifetimes:

The same initial withdrawal rate for single or joint life.
Unlike traditional GLWB riders, with FlexChoice there is no penalty for covering two lives. Married or single clients receive the same initial withdrawal rate, which stays locked in as long as the account value is greater than zero.6 Even better, clients don’t have to choose single or joint life at the time they invest. They can make that selection in the future if the account value reduces to zero due to market conditions or an allowable withdrawal, giving them more time to assess their needs. 
For additional flexibility, clients can also choose between two withdrawal options. One can offer a level stream of income throughout retirement, while the other offers more income earlier in retirement.

Income is based on the age of the older spouse.
Nearly 90% of couples have spouses with different ages, with an average age difference of 2.3 years.7 This age gap presents another challenge for married couples purchasing annuities with traditional GLWB riders, as income typically is based on the age of the younger spouse. But with FlexChoice, income is based on the age of the older spouse if the contract is jointly owned, which gives clients the option to get more income, sooner. “It’s another compromise that couples no longer have to worry about,” says Lambert. 

Income continues after one spouse dies.
Most importantly, FlexChoice ensures that there will be no interruption of income in the event of a spouse’s death. The surviving spouse can continue to receive withdrawals at the same established withdrawal rate until their account value reduces to zero.8 And as long as the account value reduces to zero due to market conditions or an allowable withdrawal, that spouse is guaranteed to continue receiving income for the remainder of his or her lifetime. 

Thanks to these features, married clients face fewer tough choices when planning for retirement income. 

Advisors and their married clients should discuss the role that a variable annuity with the FlexChoice rider could play in the income-generating portion of their portfolios. This solution, combined with other investments that address clients’ needs for asset growth or other goals, can help them feel confident that both spouses can enjoy a comfortable, financially secure retirement. 

“Couples deserve the level of comfort that comes with knowing that a retirement plan includes guaranteed retirement income for life for both spouses,” says Lambert. 


1LIMRA Secure Retirement Institute, U.S. Individual Annuities Sales Survey, 2016 

2Variable Annuity Guaranteed Living Benefits Utilization Study, Joint Sponsored by the Society of Actuaries and LIMRA, 2013

3U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplement, 2013

4 FlexChoice is referred to as the Guaranteed Lifetime Withdrawal Benefit in the prospectus and is available for an additional annual fee of 1.20% of the Benefit Base. Automatic Step-Ups may increase the annual charge to a rate not to exceed 2.00%. 
5 We use the terms “income” and “lifetime income” to refer to any allowable withdrawals under the FlexChoice rider, as well as any lifetime income payments your client would receive under the rider if your client’s account value reduces to zero.

6 The initial withdrawal rate is based on your client’s age—or the age of the older owner if jointly owned—at the time of their 1st withdrawal after age 59½. Your clients can continue to withdraw income at their initial withdrawal rate until the account value reduces to zero. If the account value reduces to zero due to a non-excess withdrawal, fund performance, or the rider charge, they can elect to receive income for 1 or 2 lives based on the applicable Lifetime Guarantee Rate. The Joint Lifetime Guarantee Rate is less than the Single Lifetime Guarantee Rate. The Joint Lifetime Guarantee Rate is only available for spouses. The spouse cannot be more than 10 years younger (4 years in NY) than the older owner as determined by the birthdays of the two individuals. If a contract is jointly owned, the Joint Lifetime Guarantee Rate is only available for the spouse of the older owner.

7U.S. Census Bureau, 2013

8 In order to continue the FlexChoice rider, the surviving spouse must be the sole Primary Beneficiary and cannot be more than 10 years younger (4 years younger in NY) than the older owner as determined by the birthdays of the two individuals.

It is possible to lose money in a variable annuity even when an optional protection benefit is elected. Guarantees are subject to the issuing insurance company’s financial strength and claims paying ability.

The prospectus for a MetLife variable annuity issued by a MetLife insurance company is available from MetLife. The contract prospectus contains information about the contract’s features, risks, charges and expenses. Clients should read the prospectus and consider this information carefully before investing. Availability and features may vary by state. MetLife variable annuities are long-term investments designed for retirement purposes and have limitations, exclusions, charges, termination provisions and terms for keeping them in force. The account value is subject to market fluctuations and investment risk so that, when withdrawn, it may be worth more or less than its original value.

Variable annuities are issued by MetLife Insurance Company USA, Charlotte, NC 28277 or First MetLife Investors Insurance Company, New York, NY 10166 and are distributed by MetLife Investors Distribution Company (member FINRA). All are MetLife companies. L916478197[0917]


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