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MetLife, Pru offer new strategies for retirement.

Two insurance industry giants have developed retirement-income schemes that urge individuals to do something that goes against human nature: defer gratification.

Prudential Financial was first out of the box with its Income Bridge Approach to maximizing Social Security income, for which it is seeking a patent. Individuals may initiate Social Security payments as early as age 62, but the payments become much larger if they hold off three or four years to their fill retirement age or to age 70, when the initial payment can be more than double that commencing at age 62. Prudential sees even more value in the strategy because Social Security income is tax-free for most people, provides annual inflation protection, lasts for life, and continues payments to a spouse when the individual dies.

To make up for the initial absence of Social Security income, Prudential has clients roll over some assets in defined-contribution or Individual Retirement Accounts into a period-certain immediate annuity that increases payouts by 3% annually. Prudential uses proprietary software to illustrate scenarios for increasing Social Security benefits. The software incorporates personal information to optimize the strategy for each client. Normally, individuals initiate Social Security early and then supplement income with IRA withdrawals, but Prudential said its new approach should result in lower annual expenses, lower taxes and better protection against running out of income. The company introduced the program to retirees in its defined-contribution plans.

In September, MetLife Retirement & Savings launched MetLife Retirement Income Insurance, a fixed annuity that defers payouts until later in life, such as an 85th birthday, when an individual's other income sources may 2be running low. Offered as a voluntary benefit in the workplace and funded with after-tax contributions, the annuity generates a stream of income beginning sometime in the future as decided by the employee--perhaps 15, 20 or 30 years. It can be funded with a single lump sum or with flexible premiums, and it is portable. A companion product is available for pretax rollover funds.

The income insurance plan is the latest of several personal retirement plans that MetLife offers.
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Title Annotation:MetLife Retirement & Savings; Prudential Financial Inc.
Author:Panko, Ron
Publication:Best's Review
Geographic Code:1USA
Date:Dec 1, 2004
Previous Article:Mutual Protective/Medico Life Insurance Companies.
Next Article:Annuity benefits prove their value.

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