What will you learn in this review?
In this review of the NCIT – American Funds Lifetime Income Builder annuity, we will be going over the following information:
- Type of product
- How the product works
- Realistic short – and long-term expectations
- Charges and fees
- How the product should or should not be used
Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.
As your retirement date gets closer, you are likely concerned about some specific financial-related factors – namely growing your current asset base, and generating enough income throughout the remainder of your lifetime (no matter how long that may be) in order to fund your lifestyle.
Accomplishing this can be somewhat tricky – even for experienced financial advisors – given the extremely volatile stock market and the historically low-interest rates that we’ve seen in the U.S. for more than a decade now.
That, coupled with a shaky Social Security program and the “promise” of higher income tax rates coming our way, can give anyone that “deer in the headlights” look when creating and/or updating a retirement plan.
Over the past several years, though, one financial vehicle has become much more popular with retirees, as well as those who are approaching this time in their lives. That product is the fixed indexed annuity.
This is because, in many ways, fixed indexed annuities can provide you with the “best of both worlds.” What exactly does that mean?
First, it offers the opportunity for a higher return than that of a regular fixed annuity. With today’s low-interest rates, it can be hard to generate a return that meets, much less beats, inflation. So, the fact that these annuities have their return linked to underlying market indexes is key.
On the other side of the coin, if the tracked index(es) does not perform well in a given contract year, you won’t incur a loss. Rather, the account will be credited with a minimum guaranteed return – which currently (in late 2021) is in the range of 0% to 2% on many of these types of annuities.
In addition, as with other annuities, a fixed indexed annuity can also offer an income stream that lasts for a specific period of time, or even for the remainder of your lifetime if you choose that particular income alternative.
With that in mind, it is easy to see why fixed indexed annuities, or FIAs, have become so popular with investors who are tired of stock market losses, and who also want to know that their money will be there when they need it – and for as long as they need it.
But, before you run out and purchase any annuity, it is important that you have a good understanding of how the product works, as well as knowing the ins and outs of the crediting of returns in the account, and how to set up a withdrawal or income generation plan that works best for your specific needs and objectives.
Annuity and Retirement Income Planning Information You Can Trust
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Who exactly IS Annuity Gator? (And why should you even care?)
We are a team of retirement income and annuity specialists who focus entirely on offering in-depth, and unbiased, annuity reviews. Our online database – which can be accessed directly from our website – has reviews on hundreds of annuities from multiple annuity and insurance providers.
Unlike many of our competitors – who have only recently started to offer annuities online – we have been at this for quite a while now. Our primary mission is – and always has been – to provide information about annuities to consumers, as well as to insurance and financial advisors so that they know exactly what they may (or may not!) be getting into before it is too late.
Annuities can be highly complex – especially the ones that have a lot of “moving parts” like fixed indexed annuities. So, it can help to have someone like the Annuity Gator on your side who is well-versed in how annuities work and who can also pare down the massive amount of “fine print” into something that is more easily understood.
When you are looking for annuity information online, it is essential that you know who is truly trying to provide you with good education on the products, and who is simply trying to sell you something… regardless of whether or not it is the right financial vehicle for you.
It’s easy to be lured into some of the other websites out there on the Internet – especially when the sites make bold claims along the lines of:
· Easiest annuity buying process
· Low annuity fees
· High-income payouts
· Top-rated annuity carriers
· Income stream for your entire lifetime
· The customer is always right!
Does this look familiar?
If you’ve ended up here on our website because you’re searching for more details on the newly released NCIT – American Funds Lifetime Income Builder, you are definitely in the right place. In fact, we’ll even go so far as to say that ours is the only website where you’ll get all of the information that you need for making a truly well-informed decision.
So, if you’re ready to get started, then, let’s go ahead and dive in!
The NCIT – American Funds Income Builder Target Date Annuity at a Glance
|Product Name||Income Builder Target Date Annuity|
|Issuer||Nationwide / Annexus / Capital Group (American Funds)|
|Type of Product||Target Date Fund with a distribution feature|
|A.M. Best Rating (Nationwide)||A+|
|Phone Number||(800) 321-6064|
Opening Thoughts on the Income Builder Target Date Annuity from NCIT / American Funds
Nationwide has a history of strength that has lasted for more than 90 years, and today it is one of the largest insurance and financial services companies around the globe. The company specializes in providing annuities, as well as mutual funds, retirement plans, and life insurance coverage for both individuals and businesses.
There are numerous Nationwide affiliate companies, too, that are located throughout the United States, including those that specialize in property and casualty insurance, life insurance, financial services, and strategic investments.
Nationwide Life and Annuity Insurance Company has high ratings from the insurer rating agencies, including a(n):
- A+ from A.M. Best Company
- A+ from S&P
- A1 from Moody’s
Annexus is an independent retirement planning product design and distribution company that provides financial security for retirees, as well as those who are preparing for retirement.
The company has established strong partnerships with some of the nation’s largest insurance carriers, as well as leading investment banks, and world-renowned economists – which includes Nationwide Insurance Company.
Capital Group is the “home” of American Funds. This company has been helping investors since 1931 with growing and protecting savings for retirement, as well as other short- and long-term objectives. The company currently holds more than $2.2 trillion in assets under management, so it is extremely strong and stable financially.
Recently, Nationwide and Capital Group have collaborated to introduce the NCIT American Funds Lifetime Income Builder Target Date Series, with the annuity portion of the vehicle actually invented by Annexus Retirement Solutions.
The product, which will be offered in defined-contribution plans (such as the 401k), is engineered to deliver 6% income at retirement, and it is structured as a collective investment trust. This refers to an alternative to mutual funds that are typically lower in fees.
Before we get into the gritty details, here are some legal disclosures we need to provide…
This is an independent product review, not a recommendation to buy or sell an annuity. Neither Nationwide Financial, Annexus, nor Capital Group / American Funds have not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners.
How Nationwide and American Funds Describe the NCIT – American Funds Lifetime Income Builder
According to Nationwide, the Lifetime Income Builder product “can change retirement planning for the majority of Americans” – in particular those who do not have access to traditional pension plans.
Gone are the days when retirees were handed a gold watch and an income stream for life from their employer. Today, many companies are getting out of the traditional pension offering – due in large part to the expense of keeping the plans paying out to retirees who are living much longer now – and instead offering defined contribution plans (like the 401k), where it is up to the participant to ensure whether or not they’ll have enough income in retirement.
The Lifetime Income Builder is technically a hybrid product that consists of a target-date fund that is “packaged” with an annuity in order to provide retirement income as part of an overall savings plan. (This differs from the typical target-date fund, which usually functions as a way to build wealth, but does not normally have a built-in income or distribution mechanism).
Target date funds, or TDFs, are actually a type of mutual fund that is designed specifically for retirement investing. They consist of collections of investments that are designed to mature at a certain time – in this case, at the time of the investor’s retirement. These financial vehicles adjust as the retirement date gets closer, and in turn, become more conservative in order to preserve wealth as the investor/retiree starts making withdrawals.
The TDF Series is designed to deliver a total income of 6% by the projected retirement start date of its holder. In order to promote growth and income features, the product uses various proprietary funds from American Funds.
With that in mind, the NCIT American Funds Lifetime Income Builder Target Date Series – also referred to as the TDF Series, is packaged as a new generation of retirement funds.
It incorporates the Annexus Lifetime Income Builder which is a fixed annuity with a guaranteed lifetime withdrawal benefit that offers a combination of liquidity, portability, and ease of use that is currently missing from other in-plan income solutions.
The innovative Lifetime Income Builder combines a guaranteed income stream with a systematic withdrawal strategy that efficiently addresses the risks that individuals face today with generating retirement income. Annexus partnered with Nationwide Insurance to create this competitive plan – which will now be offered as an option in defined contribution retirement plans.
How an Advisor Might “Pitch” the NCIT Lifetime Income Builder Target Date Series
With asset and income depletion being high on the concern list for retirees and pre-retirees, it is likely that an insurance or financial advisor may present the Lifetime Income Builder TDS by highlighting the ongoing stream of cash flow that it can provide.
With a fixed annuity in the mix, a financial or insurance professional might also key in on the safety of this financial vehicle, which can keep principal protected in any type of stock market environment.
Because the NCIT Lifetime Income Builder may also be included in workplace retirement plans like 401(k)s, though, it is possible that some who have access to this product might not realize its income, growth, and safety features – as well as the tax-deferred nature of any gains that take place in the product.
Fees on the Lifetime Income Builder
When it comes to products like annuities and mutual funds, it is important to be mindful of various charges or fees that you could incur. One reason for this is because they could have a major impact on your ultimate return.
Typically, annuities are considered to be long-term products, and as such, there is typically a surrender charge that is incurred if an annuity is canceled altogether, or even if more than a maximum amount of the contract value is withdrawn during the early years (aka, the surrender charge period). With that in mind, it is important to only contribute funds to this – or any – long-term financial vehicle that won’t have to be accessed for future emergencies and/or other needs.
In addition, if the distribution(s) from the plan occur before you turn age 59 ½, you could also incur an “early withdrawal” charge of 10% from the IRS. This fee is in addition to any taxes that you might owe.
With that in mind, this (and for that matter, any) annuity should be considered a long-term financial commitment. So, the money that you contribute to this annuity should not consist of funds that you might need to access for an emergency in the future.
The Annuity Gator’s End Take on the NCIT – American Funds Lifetime Income Builder TDS
The NCIT – American Funds Lifetime Income Builder is a new, hybrid financial vehicle. So, at that time (fall 2021), there is no track record on which to base its performance. That being said, there are still some ways to determine whether or not to consider this particular product for your own specific needs.
For instance, in general, the Lifetime Income Builder may work best if you are looking for a way to:
- Generate tax-deferred growth
- Keep principal safe
- Count on an income stream that will continue for the remainder of your lifetime – regardless of how long that may be
On the other hand, this might not be the best alternative for you if you:
- Do not intend to use the income feature
- Might need to access funds in the short-term for an emergency and/or other financial need
While there are many factors that need to be taken into consideration when you are planning for retirement, one of the biggest concerns is making sure that the tools you use are truly right for what you want – and need – them to do.
With regard to the NCIT – American Funds Lifetime Income Builder, you can be sure that your principal is protected, and that you can count on a lifetime stream of incoming cash flow for as long as it is needed.
In any case, if you still have questions about this – or any – retirement-income related product, Annuity Gator is here to help!
Do You Have Any Additional Questions About the NCIT – American Funds Lifetime Income Builder?
We realize that this review has run long. But quite frankly, we would much rather that you have “too much” information on this product than to not have enough. So, if you found this review to be beneficial, please feel free to pass it on and to share it with other people who could also find value in it. (And, if you found it to be confusing, please also let us know that, too.)
In addition, we are aware that information regarding any financial products can, and often does, change. So, if you happened to notice anything in this review that should be updated or revised, let us know and we will be happy to make the necessary edits.
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The Annuity Gator
P.S. If you would like to read more of our Nationwide annuity reviews, here are some links to check out:
- Nationwide Destination C Variable Annuity
- Nationwide New Heights 12 Annuity
- Nationwide Summit Fixed Indexed Annuity
- Nationwide New Heights 9 Fixed Indexed Annuity
- Nationwide Life Destination Architect 2.0 Variable Annuity
- Nationwide Life MarketFlex Advisor Variable Annuity
- Nationwide Best of America Future Venue Variable Annuity
- Nationwide Advisory Solutions Single Premium Immediate Annuity
- Nationwide INCOME Promise Select Single Premium Immediate Annuity