Counter market volatility with Income America 5ForLife
Stock market volatility is a normal part of investing, but that doesn't make it
any easier for participants who are anxiously watching their retirement plan
portfolios rise and fall.
In fact, assuming a 50-year investment horizon, participants can expect to
experience roughly 14 bear markets1—when the closing price of the stock
market drops at least 20% from its most recent high.
Beyond market volatility, there's always the threat of a recession. Since 1948,
the United States has lived through 19 recessions2, triggered by everything
from railroad failures to inflation to the dot-com bust.
While higher market volatility means higher investment risk, it also means
potentially greater earnings potential. That's why some investors are content
to ride out the ups and downs of the market while they're still working.
However, market volatility in retirement is another story.
Hanging on through market volatility
In volatile markets, prices can rise and fall rapidly, which can sometimes
cause participants to make rash decisions, such as panic-selling their
investments. And even a single misguided investment decision can have
major ramifications on participants' financial security and income in
Participants who are nearing or already in retirement are especially
vulnerable to stock market volatility. That's because when participants sell
investments to fund their lifestyle by taking income from their portfolio,
these unrealized "paper losses" become real. In particular, significant market
declines early in a participant's retirement can have dramatic "sequence of returns risk" ramifications on the longevity of a retirement investment portfolio.
Choosing steady retirement income over stock market volatility
Instead of being at the whim of the stock market in retirement, participants now have a more predictable option: Income America™ 5ForLife. By offering this series of target date portfolios in a retirement plan's lineup, you can
help plan participants limit their exposure to market volatility and enjoy
guaranteed retirement income for life.
Here's how it works. Participants contribute to the in-plan Income America
5ForLife investment option, just like any other investment in the retirement
plan lineup. When they turn 65, their income base (which is used to calculate
their guaranteed retirement income amount) is set and can never go down,
even if the market drops. Participants can then begin receiving lifetime
income payments of 5% of their income base every year for the rest of their
Consider this retirement income example: Janet has an income base of
$440,000. When she turns 65, she receives 5% of that amount ($22,000)
each year for life, even if the market drops. With Income America 5ForLife,
Janet can count on having a steady stream of income in retirement despite
Help your participants save for a future they can depend on
Participants are ready for a more secure future. In fact, research shows that
80% of participants would be more likely to leave money in their retirement
plan if their employer offered an investment option specifically to help
retirees draw income during retirement.
Consider adding Income America 5ForLife to the plan's investment lineup
to provide participants with guaranteed retirement income and protection
from stock market volatility.
1 A Brief History of U.S. Bear Markets, Investopedia.com, September 23, 2022
2 History of Recessions in the United States, thebalancemoney.com, October 19, 2022
3 The income guarantee is based on the income base at age 65, which is set to the greater of market
value or participant contributions (less withdrawals) to date. The market value of the account is
never guaranteed and fluctuates based on investment performance. To receive the guaranteed
income, a participant must stay invested in Income America 5ForLife. If the participant withdraws
more than the guaranteed annual income in any year, their income base and future guaranteed
annual income amount will decrease. If the joint option is elected, the payout will be lower than
5%, depending on the participant's age and their spouse's age. Guarantees are subject to the
claims-paying ability of the issuing companies.