The firm said the annuity takes a flexible approach to creating a lifetime stream of income in retirement. Because the annuitant can decide on the length of the deferral period, income payments could potentially factor in a higher rate of return than other fixed-interest rate products. The annuity offers a flexible premium and the option to delay the start of income payments, anywhere from 13 months to 30 years.
“There is a feature that allows the owner to accelerate or delay income payments one time based on their needs,” Jerry Patterson, senior vice president of retirement incomestrategy at the Principal Financial Group, told PLANADVISER. “If elected, the income payment is recalculated, and current rates are one of several factors considered in calculating the new income payment.”
Pointing to research that says 10,000 Baby Boomers turn 65 everyday, The Principal said its aim is to offer financial professionals a range of options to help clients turn retirement savings into guaranteed lifetime income. The Principal Deferred Income Annuity is for retirees who want to lock in a guaranteed income stream but do not need to start receiving it until later.
“The Boomers are redefining retirement,” Patterson said. “Many need options for guaranteeing retirement income that match their unique circumstances.”
The Principal Deferred Income Annuity is a tool for financial professionals to help clients transition from receiving a regular paycheck during their working years to creating a paycheck from their retirement savings guaranteed to last for the rest of their lives, Patterson said. The Principal looks to help strike the balance between the need for guarantees and the need for continued growth.