Principal Financial Group, a Des Moines insurer that is a 401(k) leader, said Tuesday that it is introducing a variable annuity rider to let retirees invest for higher returns without risking their principal.
The average 65 year old retiring today has a 50% chance of living to 85 or beyond according to mortality tables, the company said, and consequently can not rely solely on the safe returns of traditional fixed-income investments and certificates of deposit to fund retirement.
Investment Protector Plus, an optional rider on a new Principal Investment Plus variable annuity, offers an opportunity for investment growth through subaccounts that invest in mutual funds but without the risk of losing one's principal. The rider guarantees investors will get back at least 100% of the amount invested, through withdrawals, no matter how the investment accounts perform.
The rider also increases investors' guaranteed withdrawal benefit by 5% for each year no withdrawal is made during the first five years of the contract - potentially increasing the withdrawal guarantee to 125% of the principal invested. Investors can also step up their withdrawal amounts every five years to take advantage of favorable market conditions.
