1 / 4 0272821-00001-00 Ed. 01/2015 ESTIMATING COSTS AND HELPING YOU PLAN FOR YOUR RETIREMENT INCOME NEEDS While you may feel financially prepared for many aspects of retirement, you may not have considered how you will create enough income to cover healthcare costs and Medicare premiums in retirement. Many people believe that Medicare will cover all of their medical expenses in retirement – and are troubled to find this is not actually the case. This can be a great opportunity to develop a strategy that will help you pay for healthcare costs in retirement. If you: Retire at age 62 Total healthcare costs $271,000 Total healthcare costs $220,000 Total healthcare costs $200,000 1 Fidelity Benefits Consulting, 2014, “Retiree health costs hold steady,” 6/1/2014 www.fidelity.com/viewpoints/retirement/retirees-medical-expenses Planning for future healthcare costs with PRUDENTIAL DEFINED INCOME VARIABLE ANNUITY AVERAGE HEALTHCARE COSTS FOR A COUPLE BASED ON RETIREMENT AGE 1 WHEN YOU DECIDE TO RETIRE CAN MAKE A DIFFERENCE IN YOUR HEALTHCARE COSTS If you: Retire at age 65 If you: Retire at age 67 Issued by Pruco Life Insurance Company and by Pruco Life Insurance Company of New Jersey. This material must be preceded or accompanied by a current variable annuity product prospectus that includes any applicable current monthly rate sheet supplement and the applicable variable annuity summary card.
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0272821-00001-00 Ed. 01/2015
ESTIMATING COSTS AND HELPING YOU PLAN FOR YOUR RETIREMENT INCOME NEEDS While you may feel financially prepared for many aspects of retirement, you may not have considered how you will create enough income to cover healthcare costs and Medicare premiums in retirement.
Many people believe that Medicare will cover all of their medical expenses in retirement – and are troubled to find this is not actually the case. This can be a great opportunity to develop a strategy that will help you pay for healthcare costs in retirement.
If you: Retire at age 62 Total healthcare costs
$271,000
Total healthcare costs
$220,000
Total healthcare costs
$200,000 1 Fidelity Benefits Consulting, 2014, “Retiree health costs hold steady,” 6/1/2014 www.fidelity.com/viewpoints/retirement/retirees-medical-expenses
Planning for future healthcare costs with
PRUDENTIAL DEFINED INCOME VARIABLE ANNUITY
AVERAGE HEALTHCARE COSTS FOR A COUPLE BASED ON RETIREMENT AGE1
WHEN YOU DECIDE TO RETIRE CAN MAKE A DIFFERENCE IN YOUR HEALTHCARE COSTS
If you: Retire at age 65
If you: Retire at age 67
Issued by Pruco Life Insurance Company and by Pruco Life Insurance Company of New Jersey.This material must be preceded or accompanied by a current variable annuity product prospectus that includes any applicable current monthly rate sheet supplement and the applicable variable annuity summary card.
Coverage Average annual cost
Part A: Hospital Insurance: Provides hospital coverage and limited skilled nursing facility coverage $0 Premium
Part B: Medical Insurance: Provides non-hospital medical coverage; for example, doctor’s visits $1,259 Premium
Part D: Prescription Drug Coverage: Medicare drug coverage $479 Premium
Medigap: Optional Medicare supplement insurance that’s sold by private companies to provide reimbursement for some out-of-pocket medical costs (Does not cover vision, hearing or dental)
AVERAGE ANNUAL MEDICARE COSTS (Married Couple with Adjusted Gross Income (AGI) of less than $170,000 per year)
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STEP 1: DETERMINE YOUR COSTS To start your planning process, your financial professional can help you determine your premiums for Medicare, as well as your additional out-of-pocket costs. The average costs listed below can be a good starting point.
Source: Medicare.gov as of September 2014
Once you’ve estimated the costs of healthcare in retirement, you’ll need a strategy to cover your costs.
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INVESTMENT NEEDED TO GENERATE AN ANNUAL INCOME OF $5,500 AT AGE 65
STEP 2: CREATE AN INCOME STRATEGY WITH PRUDENTIAL DEFINED INCOMEThe next step is to create an income strategy to help you cover these costs. Consider putting a portion of your assets in the Prudential Defined Income Variable Annuity, a long-term retirement investment, designed to help you meet this challenge.
Prudential Defined Income can provide:
• The income you desire maybe be possible with a smaller investment as depicted below
• Tax-deferred growth of retirement income until your first Lifetime Withdrawal
• Income that lasts one lifetime (or two, if electing the spousal option)
Create guaranteed lifetime income with a smaller investment
Let’s say your goal is to generate an annual income of $5,500 to help pay for healthcare and other expenses in retirement. How much would you have to invest to meet that income goal? The chart below shows what you would need to invest in Defined Income at three different ages.
These hypothetical examples assume income percentages of 5.75%, 5.25%, 4.60%, and an income growth rate of 5.5%, and are for illustrative purposes only. They do not reflect a specific annuity, an actual account value or the performance of any investment. Your rate is subject to change. Please refer to the applicable monthly rate sheet supplement for current rates.It is important to note that the Guaranteed Income Amount (GIA) is separate from the account value and that the account value does not impact the GIA. The account value is not guaranteed, can fluctuate and may lose value.All guarantees, including the benefit payment obligations arising under the annuity contract guarantees, rider guarantees, benefits, or annuity payout rates are backed by the claims-paying ability of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey. Those payments and the responsibility to make them are not the obligations of the third party broker/dealer from which this annuity is purchased, or any of its affiliates. All guarantees, including benefits, do not apply to the underlying investment options.
Talk to your financial professional to see if Prudential Defined Income is right for you. Ask for your customized income quote today.
4% systematic withdrawal from investment
$138,000 x 4%
= $5,500/year income
(not guaranteed for life)
Prudential Defined Income
$96,000 = $5,500/year
income(guaranteed for life)
Prudential Defined Income
$80,000 = $5,500/year
income at age 65(guaranteed for life)
Prudential Defined Income
$70,000 = $5,500/year
income at age 65(guaranteed for life)
age 65 age 65 age 60 age 55
By planning ahead you’ll benefit from guaranteed income growth. So, if you are age 60 and plan on taking income at 65, you would need 42% less capital. And if you are age 55, you would need 49% less capital!
Defined Income requires 30% less capital vs. a systematic withdrawal from an investment, to produce the same income at age 65.
Age at time of investment
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Investors should consider the features of the contract and the underlying portfolios’ investment objectives, policies, management, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectus, which can be obtained from your financial professional. Please read the prospectus carefully before investing.Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ (main office) and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Prudential Annuities is a business of Prudential Financial, Inc.Annuity contracts contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your licensed financial professional can provide you with complete details.A variable annuity is a long-term investment designed for retirement purposes. Investment returns and the principal value of an investment will fluctuate so that an investor’s units, when redeemed, may be worth more or less than the original investment. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty, sometimes referred to as an additional income tax. Withdrawals, other than from IRAs or employer retirement plans, are deemed to be gains out first for tax purposes. Withdrawals reduce the account value and the living and death benefits.
Withdrawals in excess of the Guaranteed Income Amount impact the value of your benefit and can also affect the certainty of your income. An excess withdrawal occurs when your cumulative Lifetime Withdrawals exceed your Guaranteed Income Amount in any annuity year. If an excess withdrawal is taken, only the portion of the Lifetime Withdrawal that exceeds the remaining Guaranteed Income Amount will proportionally and permanently reduce your Guaranteed Income Amount for future years. If an excess withdrawal reduces the account value to zero, no further amount would be payable and the contract terminates.
The benefit is part of your annuity and you may not cancel the benefit. However, upon specified events, the benefit may be terminated. Please see the prospectus for more details.
Prudential Annuities and its distributors and representatives do not provide tax, accounting, or legal advice. Please consult your own attorney or accountant.
Issued on contract: P-BBND(2/13) or state variation thereof
Issued on rider: P-RID-LI-DB(5/14) or state variation thereof
THE IMPACT OF FEES ON A HYPOTHETICAL INVESTMENT OF $96,000 IN A 0% GROSS RETURN SCENARIO
This hypothetical example assumes no withdrawals and is for illustrative purposes only. It does not reflect a specific annuity, an actual account value or the performance of any investment. The hypothetical returns illustrate a -3.2% annual net rate of return, which is made up of the following fees:
(i) M&E&A fee of 1.10%;
(ii) Benefit fee of 0.80%;
(iii) The ASTTM Multi-Sector Fixed Income Portfolio fee of 0.84%.
Note: We reserve the right to increase the benefit fee up to a maximum of 1.50% after the 7th annuity year. In this hypothetical example we assume the maximum benefit fee of 1.50% is applied after the 7th annuity year. Please see the prospectus for additional information. Additionally, an Annual Maintenance Fee may be deducted on each Annuity Anniversary. The charge is the lesser of $50 or 2% of the Account Value.
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