Insights and tips to help you make informed decisions about retirement

INCOME SAVVYSM

4 Today’s Retirement Realities You may need to plan for a retirement that lasts 30 years or longer

10 Behavior Matters Your current spending pattern may help indicate your retirement income needs

17 Generating Reliable Income in Retirement An annuity may help you secure guaranteed lifetime income

TABLE OF CONTENTS 2

INCOME SAVVY

When it comes to generating income for retirement, there are a number of key insights and

important factors you may want to consider, with the help of your financial advisor.

Annuity guarantees are backed by the claims-paying ability of the issuing insurance company.

This material is intended for educational purposes to help you, with the guidance of your financial advisor, make informed decisions. We are not a fiduciary and do not provide investment advice or recommendations.

Today’s Retirement Realities

4 Introduction

5 Life expectancy probabilities

6 Impact of wealth on life expectancy

7 Rising annual health care costs in retirement

8 Impact of long-term care on health care costs

9 Retirees face an increasingly larger income gap

Behavior Matters

10 Introduction

11 What type of a retirement spender will you be?

13 The Grasshopper vs. the Ant

14 How your spending may change during retirement

15 Impact of health care costs in late retirement

16 Decline in financial literacy over time

Generating Reliable Income in Retirement

17 Introduction

18 When interest rates are low, bond returns may also be low

19 Cost to generate $1,000 of annual bond and dividend income

20 The “4% Rule” has become the “2.9% Rule”

21 Market performance can impact how long your savings may last

22 Will you outlive your retirement income?

23 Benefits of annuities for guaranteed lifetime income

24 Cost to generate a specified amount of annual income

DETAILED TABLE OF CONTENTS 3

TODAY’S RETIREMENT REALITIES

4

See pages that follow for additional information

• Retirement may last longer than you think. You may need to plan for a retirement that lasts 30 years or longer. What’s more, the wealthier you are, the longer you may live.

• Rising health care costs—including the cost for long-term care—should be carefully considered as you develop your retirement income strategy.

• Fewer individuals are covered by traditional defined benefit pension plans today, which may put a greater burden on retirees to fund their retirement with income from personal savings and investments.

INCOME SAVVY

Reti

rem

ent l

ands

cape

Life expectancy probabilities | 6

Chart: Social Security Administration, Period Life Table, 2011 (published in 2015), J.P. Morgan Asset Management.Table: Social Security Administration 2015 OASDI Trustees Report.

COUNT ON LONGEVITY

Average life expectancy continues to increase and is a mid-point not an end-point. Plan on the probability of living much longer—perhaps 30 plus years in retirement—and invest a portion of your portfolio for growth to maintain your purchasing power over time.

If you’re 65 today, the probability of living to a specific age or beyond

100%

80%

60%

40%

20%

0%75 years 80 years 85 years 90 years 95 years 100 years

Perc

ent

85%

72%

54%

33%

13%

3%

79%

62%

42%

22%

7%1%

97%

90%

74%

47%

19%

4%

n Women n Men n Couple—at least one lives to specific age

Year Women Men Difference

1990 84.1 80.1 4.0

2010 85.2 82.6 2.6

2090 89.6 87.7 1.9

Average life expectancy at age 65

LIFE EXPECTANCY PROBABILITIES 5

Data courtesy of J.P. Morgan Asset Management, page 6 of “Guide to RetirementSM”.

IMPACT OF WEALTH ON LIFE EXPECTANCY 6

MORE WEALTH MAY EQUATE TO MORE YEARS

Research shows that the wealthier you are, the longer you may live—and the increase in additional years is actually greater for men than women, as shown here.

For example, the wealthiest American men born in 1940 may live an average of 5.9 years longer than similar individuals born 20 years earlier in 1920.

Change in average additional life expectancy in years at age 55, by income, between groups born in 1920 and 1940

Source: Josh Zumbrun, “The Richer You Are the Older You’ll Get,“ blogs/wsj.com, April 18, 2014. Data compiled by Barry Bosworth at the Brookings Institution using data from the University of Michigan’s Health and Retirement Study, a survey that tracks the health and work-life of 26,000 Americans as they age and retire.

-3 -2 -1 0 1 2

Change (in years)

3 4 5 6 7

Poorest 10% 1.7

2.7

3.3

3.6

3.90.5

1

1.4

1.8

2.4

3.1

4.2

4.6

4.9

5.3

5.9

-0.2

-1

-1.6

-2.1

11%–20%

21%–30%

31%–40%

41%–50%

51%–60%

61%–70%

71%–80%

81%–90%

Richest 10%

Women Men

Rising annual health care costs in retirement (traditional Medicare) | 25

$2,000

$4,000

$6,000 $4,660

$15,580

Annualgrowth7.0%

6.2%$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$0Age 65 Age 85

$18,030

(2016) (2036)

$1,460$3,180$900

$3,130

$1,900

$7,630

$400

$1,640

$2,450

Uncertainties (health care inflationvariability, Medicare solvency issues)

Vision, dental & hearing

Medigap Plan F (covers Parts A and Bco-pays and deductibles)

Part D premiums and prescription out-of-pocket costs (varies: may be up to approximately $4,000 in 2016)

Part B (doctors, tests & outpatienthospital insurance)

Notes: In most states, older individuals have higher Medigap premiums. Exceptions: AR, CT, MA, ME, MN, NY, VT and WA have the same Medigap premiums for all ages. Most Medigap policies in AZ, FL, ID and MO will have the same premium for all those who first purchased Medigap at the same age of first purchase. Analysis includes Medigap Plan F (the most comprehensive plan). Parts B and D premiums are calculated from federal tax returns 2 years prior; individuals may file for an exception if they reduce or stop work. Age 85 estimated total median cost in 2016 is $7,490 (includes more prescription expense and higher Medigap premiums based on age). Modified Adjusted Gross Income (MAGI) is calculated by taking Adjusted Gross Income (AGI) and adding back certain deductions such as foreign earned income, tax-exempt interest, taxable IRA contributions and Social Security payments.

Source: Employee Benefit Research Institute (EBRI) data as of December 31, 2015; SelectQuote data as of December 31, 2015; J.P. Morgan analysis.

Spen

ding

Estimated median health care costs per person

A GROWING CONCERN

Given the variability of health care costs, it may be prudent to assume an inflation rate of 7.0%, which means that you may need growth as well as current income from your portfolio in retirement.

2016 additional premium per person for Modified Adjusted Gross Incomes (MAGI) of:

FILING SINGLE MARRIED FILING JOINTLY ADDITIONAL PREMIUM TOTAL MEDIAN COSTS

> $85,000 - $107,000 > $170,000 - $214,000 $737 $5,397

> 107,000 - $160,000 > $214,000 - $320,000 $1,855 $6,515

> $160,000 - $214,000 > $320,000 - $428,000 $2,972 $7,632

> $214,000 > $428,000 $4,091 $8,751

RISING ANNUAL HEALTH CARE COSTS IN RETIREMENT 7

Data courtesy of J.P. Morgan Asset Management, page 25 of “Guide to RetirementSM”.

IMPACT OF LONG-TERM CARE ON HEALTH CARE COSTS 8

CONSIDER THE POTENTIAL FOR DRAMATICALLY INCREASED COSTS

If you end up needing extensive and/or long-lasting assistance with the Activities of Daily Living (eating, bathing, dressing, toileting, transferring and continence), it can dramatically drive up your health care costs in retirement.

Distribution of 10-year out-of-pocket health expenses (Top wealth quintile of retired households)

Source: 2002-2012 Health and Retirement Study, sponsored by the National Institute on Aging and the Social Security Administration.

1009080706050403020100$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

Those who needed assistance with Activities of Daily Living and were “unlucky” (winding up in the 95th percentile) had long-term care expenses of more than $279,091.

Assistance needed in two or more Activities of Daily Living

No assistance needed in Activities of Daily Living

Distribution Percentile 95%Percentile

RETIREES FACE AN INCREASINGLY LARGER INCOME GAP 9

BRIDGING THE GAP

As a result of fewer individuals being covered by traditional defined benefit pension plans, many of today’s retirees will reach retirement with a larger gap between what they earned before retirement and what they’re receiving in income after they retire.

This gap may need to be filled with income from personal savings and investments, a part-time job or rental income.

Comparison of the gap between Working Income and Retirement Income for specified years

Source: Patrick J. Purcell, “Income Replacement Ratios in the Health and Retirement Study,” Social Security Bulletin, Vol. 72, No. 3, 2012. Data is from Table A-4, 75th percentile. Based on most current data available. Note: “Working Income” is income from employment. “Retirement Income” is income from Social Security, pensions, annuities, investments, etc.

1992 20001994 20021996 20041998 2006 2008$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

Working Income Retired Income

INCOMEGAP

BEHAVIOR MATTERS

See pages that follow for additional information

• Your pre-retirement spending pattern may indicate how you will spend money during your retirement years.

• If you’re like many other Americans, your spending in most expense categories will generally decline throughout retirement. However, if you live well into your 80s and 90s, your expenditures may take an upward turn and steadily increase due to health care costs.

• Research shows that your cognitive ability to make sound financial decisions may decline during your retirement years—and you may not even know it.

INCOME SAVVY

10

WHAT TYPE OF A RETIREMENT SPENDER WILL YOU BE? 11

FOODIES (39% of households)

• Fairly frugal in retirement, with the lowest overall spending

• 28% of expenditures are on food and beverages, including purchases at big box stores or online retailers

• Tend to have lower housing expenditures as they have paid off their mortgage and have limited property taxes

• Tend to spend less as they age

• Should separately account for health expenditures, but can otherwise reasonably plan for their spending to decrease as they continue through retirement

HOMEBODIES (29% of households)

• Tend to spend more on housing than others

• May still have a mortgage, but even those without mortgages have significant expenses for property taxes, ongoing maintenance, repairs, furnishings and utilities

• As they age, homebodies may spend more on home maintenance and chores for activities they are no longer able to manage on their own

• Should make clear plans about future housing: When will the mortgage be paid off? Is there a second home that may be sold? What portion of the budget consists of property taxes and utility bills? What are future plans for downsizing or further renovating the home?

Comparison of five different types of retirees and how their spending patterns may differ

Sources: Wade D. Pfau, Ph.D., CFA, “What Type of Retirement Spender Will You Be?,” Forbes.com, August 18, 2016, based on data from Katherine Roy and Sharon Carson, “Spending in Retirement,” J.P. Morgan Asset Management Retirement Insights, August 20, 2015. Note: Spending analysis represented by 613,000 households who have debit and credit card relationships with Chase Bank and not the entire U.S. population.

WHAT TYPE OF A RETIREMENT SPENDER WILL YOU BE? (continued) 12

GLOBETROTTERS (5% of households)

• Spend more on travel and have the highest overall expenditures of the five different retiree types

• Represent 11% to 13% of households with at least $1 million of investment assets

• Spending does not seem to decline much with age; proportion of globetrotters in the population stays consistent at the age 75+ range, and expenditures on travel are also the highest for this age group

• Should probably work from the assumption that their retirement spending will keep pace with inflation

HEALTH CARE SPENDERS (4% of households)

• Health care expenditures absorb 28% of income (Medicare-related expenses and prescription costs)

• As health care expenses may rise faster than the overall inflation rate, those who are part of this category should consider taking time to project their health care expenses

SNOWFLAKES (24% of households)

• Snowflakes are unique; households in this category have experiences that cannot be categorized generally

Sources: Wade D. Pfau, Ph.D., CFA, “What Type of Retirement Spender Will You Be?,” Forbes.com, August 18, 2016, based on data from Katherine Roy and Sharon Carson, “Spending in Retirement,” J.P. Morgan Asset Management Retirement Insights, August 20, 2015. Note: Spending analysis represented by 613,000 households who have debit and credit card relationships with Chase Bank and not the entire U.S. population.

THE GRASSHOPPER VS. THE ANT. WHICH ONE ARE YOU? 13

YOUR CURRENT SPENDING STYLE MAY CONTINUE IN RETIREMENT

In this example, spenders are classified as “Grasshoppers” and savers are classified as “Ants.”

Research shows that Grasshoppers typically spend down their assets in retirement much faster than Ants. As shown here, Grasshoppers had only 23% of their wealth in 2000 remaining by 2014, while Ants still had 59% of their wealth in year 2000 remaining.

As you prepare for retirement, determine whether you’re a Grasshopper or an Ant and consider structuring your income strategy accordingly.

Comparison of wealth in year 2000 remaining during the initial years of retirement

Grasshoppers tend to outspend Ants

Wea

lth re

mai

ning

Source: Guo, Cheng, Browning and Finke, 2016. “Spending in Retirement: Determining the Consumption Gap.” Journal of Financial Planning 29(2): 42–53.

2006

93%

75%

2004

80%

110%

2002

78%

73%

2010

47%

67%

2012

46%

80%

2014

23%

59%

2008

63%

102%

Ants Grasshoppers

2000

100%

HOW YOUR SPENDING MAY CHANGE DURING RETIREMENT 14

YOU MAY NEED THE MOST INCOME EARLY IN RETIREMENT

It’s often assumed that expenses will remain the same throughout retirement—or possibly even rise due to inflation. However, research shows that expenditures generally decline throughout retirement, so you may need more income shortly after you retire—and less later on.

As you can see illustrated in this table, total expenditures for those age 75+ are 35% less than those age 55-64.

Total annual expenditures by age

Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, August 2016.

Age 55–64 Age 65–74 Age 75+

Annual Spending

$58,781$49,477

$38,123

% Change55–75+

Apparel & Services $1,596 $1,331 $698 -56%

Entertainment 3,323 3,005 1,728 -48%

Food & Alcohol 7,566 6,665 4,805 -36%

Health care 5,112 5,715 5,814 +14%

Housing 18,188 16,465 14,253 -22%

Transportation 10,024 8,028 5,228 -48%

Miscellaneous & Other 5,308 4,582 4,172 -21%

Personal Insurance & Other 7,664 3,686 1,425 -81%

Total Expenditures $58,781 $49,477 $38,123 -35%

IMPACT OF HEALTH CARE COSTS IN LATE RETIREMENT 15

YOU COULD EXPERIENCE AN UPTURN IN EXPENDITURES IN THE LATER YEARS

While research shows that expenditures generally decline throughout retirement, you could experience an upward turn in expenditures related to health care costs as you reach your mid-80s and enter your 90s.

Of course, you’ll want to weigh this against the fact that life expectancy for a 65-year-old male is age 83 and life expectancy for a 65-year-old female is age 86.

The spending “smile”

Source for chart: David Blanchett, “Exploring the Retirement Consumption Puzzles,” Journal of Financial Planning, May 2014.Source for life expectancy data: cdc.gov, Health, United States, 2015 (Table 15. Life expectancy at birth, at age 65, and at age 75, by sex, race, and Hispanic origin: United States, selected years, 1900-2014).

$70,00065 70 75 80

Age

85 90 95

$75,000

$80,000

$85,000

$90,000

Real

Spe

ndin

g

$95,000

$100,000

$105,000

Constant Inflation-Adjusted Spending

“Blanchett’s Spending Smile” for $100,000 Spender

DECLINE IN FINANCIAL LITERACY OVER TIME 16

YOUR JUDGMENT COULD BECOME IMPAIRED OVER TIME—AND YOU MAY NOT EVEN REALIZE IT

Research shows that one’s cognitive ability to make sound financial decisions peaks just before retirement and generally declines thereafter.

Interestingly, one’s confidence level in making sound financial decisions generally remains constant over time.

Financial literacy score and confidence level in making financial decisions by age

Source: Finke, Howe and Huston, “Old Age and the Decline in Financial Literacy.” Management Science, 2016; DOI: 10.1287/mnsc.2015.2293.

Financial Literacy Confidence

0%

60 65 70 75

Age

80 85

10%

20%

30%

40%

Perc

enta

ge fi

nanc

ial l

itera

cy s

core

50%

60%

70%

80%

90%

GENERATING RELIABLE INCOME IN RETIREMENT

INCOME SAVVY

See pages that follow for additional information

• When interest rates are low, it can be more costly to generate income from bonds or stocks.

• You may not be able to count on traditional approaches to generating retirement income, such as the “4% Rule,” in today’s interest rate and stock market environment.

• An annuity may be one potential solution for generating the additional guaranteed lifetime income you may want and need to help cover your expenses in retirement.

17

WHEN INTEREST RATES ARE LOW, BOND RETURNS MAY ALSO BE LOW 18

HOPING FOR HIGHER BOND RETURNS?

History shows that when interest rates are low, bond returns have remained low in the years that follow.

If you’re hoping returns on bonds will improve soon to help generate more retirement income, you may be disappointed.

Intermediate-Term Government Bond (ITGB) yield compared to subsequent 5-year bond returns

Source: Morningstar’s Stocks, Bonds, Bills and Inflation dataset, 2016. See page 25 for additional information.

12%

14%

16%

18%

10%

8%

6%

4%

2%

0%1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

ITGB YieldSubsequent 5-Year Bond Returns

Bond

Yie

lds a

nd S

ubse

quen

t 5-Y

ear R

etur

ns

COST TO GENERATE $1,000 OF ANNUAL BOND AND DIVIDEND INCOME 19

TODAY’S LOW RATES AND DIVIDEND YIELDS MAKE INCOME GENERATION MORE EXPENSIVE

When interest rates and dividend yields are low, it costs more to generate income from a bond or stock investment.

For example, during the period 1975 to 1994, you would have needed $11,680 on average to generate $1,000 of annual income from a bond. More recently, during the period 1995 to 2015, you would have needed $28,767 on average to generate that same $1,000 annual income stream from a bond.

1995–2015 1975–1994

Cost of $1,000 Bond Income

$21,539

$11,680

Cost of $1,000 Dividends

1955–1974

Cost of generating income from noted instruments over various time periods

Source: The St. Louis Federal Reserve. See page 25 for additional information.

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

$57,219

$25,688$28,811$28,767

THE “4% RULE” HAS BECOME THE “2.9% RULE” 20

ONE LONGSTANDING “RULE” FOR GENERATING INCOME MAY NO LONGER BE VIABLE

If you thought you could count on the “4% Rule” for generating retirement income from your portfolio, you may have to think again.

Research shows that in today’s interest rate and market environment, you may only be able to withdraw 2.9% (adjusted annually for inflation) from a portfolio allocated 50% to stocks and 50% to bonds and have a 90% chance of your income lasting for a 30-year retirement.

A look at sustainable withdrawal rates in today’s environment

Source: Wade D. Pfau, Ph.D., CFA, www.retirementresearcher.com/dashboard.

Note: The Conservative strategy uses a 25% stock allocation and seeks a 95% chance that the portfolio will not be depleted within 30 years. The Moderate strategy uses a 50% stock allocation and seeks a 90% chance that the portfolio will not be depleted within 30 years. The Aggressive strategy uses a 75% stock allocation and seeks an 80% chance that the portfolio will not be depleted within 30 years. Analysis assumes that withdrawals are made at the start of each year, retirees earn the underlying indexed market returns, and market return simulations are based on capital market assumptions defined at www.retirementresearcher.com/dashboard. See page 25 for additional information.

Sustainable Withdrawal Rates from an investment portfolio over 30 years as of July 2016

Investment Strategy Conservative Moderate Aggressive

Inflation (CPI-U) Adjusted Spending (i.e., “the 4% Rule”)

2.39% 2.89% 3.59%

MARKET PERFORMANCE CAN IMPACT HOW LONG YOUR SAVINGS MAY LAST 21

INVESTMENT RETURNS IN THE EARLY YEARS OF RETIREMENT CAN BE DISPROPORTIONATELY POWERFUL

Sequence of returns risk refers to the order in which you encounter positive and negative investment returns—and how such returns may impact your investment and its ability to generate income.

As shown here, the investment return in the first year of retirement explains more than 14% of the final outcome for retirees. Sustainable withdrawal rates are disproportionately explained by what happens in the early part of retirement. A market downturn early in retirement can have lasting effects.

A look at sequence of returns risk while you are saving for retirement and once you retire

Source: Wade D. Pfau, Ph.D., CFA, “The Lifetime Sequence of Returns—A Retirement Planning Conundrum,” Journal of Financial Service Professionals, January 2014. See page 25 for additional information.

20%

5%

10%

15%

0%60504030

The first yearof retirement

Years

Retirees are most vulnerable to sequence of returns risk in the initial years of retirement

The

Expl

anat

ory

Pow

er o

f Eac

h Ye

ar’s

Retu

rn

20100

WILL YOU OUTLIVE YOUR RETIREMENT INCOME? 22

ARE YOU COMFORTABLE ROLLING THE DICE WHEN IT COMES TO YOUR RETIREMENT INCOME?

If your withdrawal rate is too high when generating income from a portfolio of assets, it lowers the “confidence” level of income lasting over a 30-year retirement.

As shown to the left, assuming a 4% withdrawal rate and a portfolio allocated 60% to stocks and 40% to bonds, there would be a 30-40% chance that your portfolio would fail to provide lasting income over a 30-year retirement.

Probability that your assets will last throughout your retirement based on various withdrawal rates

The hypothetical table shows the probability that your assets will last through a 30-year retirement, given certain withdrawal rates and stock/bond allocations.Source: BlackRock, 2015. Projections shown above assume the withdrawal in the first year is the stated percent of the original portfolio value. Each year thereafter, the amount withdrawn is adjusted upward 3% to account for inflation. IMPORTANT: This illustration is hypothetical in nature, does not reflect actual investment results and is not a guarantee of future results. See page 25 for additional information.

30-Year PeriodStock/Bond Allocations (%)

20/80 40/60 60/40 80/20 100/0

90-100% 90-100% 90-100% 90-100% 90-100%

90-100% 90-100% 90-100% 90-100% 90-100%

90-100% 90-100% 80-90% 80-90% 80-90%

40-50% 50-60% 60-70% 60-70% 60-70%

0-10% 20-30% 30-40% 40-50% 50-60%

0-10% 0-10% 10-20% 30-40% 30-40%

0-10% 0-10% 0-10% 10-20% 20-30%

0-10% 0-10% 0-10% 0-10% 10-20%

1%

3%

2%

4%

5%

6%

7%

8%

Confidence is high Confidence is moderate to low

Confidence is moderately high Confidence is very low

Infla

tion-

adju

sted

with

draw

al ra

tes

BENEFITS OF ANNUITIES FOR GUARANTEED LIFETIME INCOME 23

ANNUITIES OFFER A POWERFUL COMBINATION OF BENEFITS

When it comes to securing reliable income in retirement, an annuity can offer you a number of key benefits, including guaranteed lifetime income for as long as you—or you and your spouse — live depending on your choice of a Single Life or Joint Life income option.

Ask your financial advisor if an annuity may be an appropriate solution for your retirement income needs.

A look at the different types of annuities and several key benefits

See page 26 for additional information about annuities. Be sure to ask your financial advisor for complete details about the annuity you may be considering, including limitations and risks. Products may not be available in all states or may vary by state. Contract and benefit guarantees are backed by the claims-paying ability of the issuing insurer.

1 Available or through the optional income benefit or annuitization (at no cost)2 Available through annuitization only.3 If the contract is annuitized, you may no longer access principal.

VariableAnnuities

IndexAnnuities

FixedAnnuities

ImmediateAnnuities

Deferred Income

Annuities

Guaranteed lifetime income

Income with growth potential

Increase options

available

Increase options

available

Access to principal (withdrawal

charges may apply)

(withdrawal charges and

MVA may apply)

(withdrawal charges and

MVA may apply)

No No

Market participation

No, but they provide potential for interest

to be credited based in part on the

performance of a specified index

No No No

3 3 3

11 1 2 2

COST TO GENERATE A SPECIFIED AMOUNT OF ANNUAL INCOME 24

Want to improve your guaranteed retirement income percentage (GRIP)?

If you are facing an income gap, that is, you don’t have enough income from guaranteed sources (such as Social Security or a pension) to cover your essential lifestyle expenses in retirement, you may want to consider improving your GRIP by purchasing an annuity.

You can use the table to the left with the help of your financial advisor to determine how much you would need to allocate to an annuity to generate a specified amount of annual income.

Amount needed to cover an income gap assuming different initial withdrawal rates

Annuity income protection features may be standard or optional. Additional fees, withdrawal parameters, age restrictions, and other limitations apply. With certain variable annuities, investment requirements may also apply. To realize the benefits of an income protection feature, you will need to take withdrawals within certain parameters. With certain variable annuity income protection features and income options, the amount available for lifetime income will be reduced if the contract value is completely depleted due to market volatility and/or withdrawals taken within the feature’s parameters. Depending on the performance of your annuity, you may never need to rely on the protection provided by an income protection feature. Please see a product brochure or prospectus for complete details about the annuity you may be considering, including limitations and risks. See page 26 for additional information about annuities.

Essential Lifestyle Expenses are the needs of daily living and maintaining the lifestyle you desire, such as the cost of your home, food, clothing, transportation, and health care-related expenses. Of course, an annuity may also be used to generate income to help cover discretionary lifestyle expenses.

Your Essential Lifestyle

Income Gap

Your Initial Withdrawal Rate

3% 4% 5% 6% 7%

$10,000 $333,334 $250,000 $200,000 $166,667 $142,858

$20,000 $666,667 $500,000 $400,000 $333,334 $285,715

$30,000 $1,000,000 $750,000 $600,000 $500,000 $428,572

$40,000 $1,333,334 $1,000,000 $800,000 $666,667 $571,429

$50,000 $1,666,667 $1,250,000 $1,000,000 $833,334 $714,286

ADDITIONAL INFORMATION 25

• “When interest rates are low, bond returns may also be low”: Government bonds are subject to interest rate risk, but they are backed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. Interest from U.S. government bonds is exempt from state and local taxes, but may be subject to federal income tax. Annuity guarantees are backed by the claims-paying ability of the issuing insurance company. An investment in a variable annuity is subject to risk, including possible loss of principal. The contract, when redeemed, may be worth more or less than the total amount invested. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal early withdrawal tax penalty may apply.

• “Cost to generate $1,000 of annual bond and dividend income”: Government bonds are subject to interest rate risk, but they are backed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. Interest from U.S. government bonds is exempt from state and local taxes, but may be subject to federal income tax. Dividend-paying stocks can provide a tax advantage. Qualified dividends are currently taxed at the lower, long-term capital gains rate rather than at the higher rate for an individual’s ordinary income.

• “The 4% Rule” has become the “2.9% Rule” – Note Regarding Capital Market Assumptions: Expectations used connect the historical averages from Robert Shiller’s dataset with the current values for inflation and interest rates. This makes allowances for the fact that interest rates and inflation are currently far from their historical averages (which is particularly important for retirees because of sequence risk–early returns matter disproportionately), but it also respects historical averages and does not force returns to remain low for the entire retirement period.

• “Market performance can impact how long your savings may last”: The chart shown attempts to illustrate more clearly how sequence of returns risk impacts both the accumulation and distribution phases. It is based on simple regressions which determine how much of the outcome (wealth accumulation or sustainable withdrawal rate) can be explained by the returns experienced in each year of the life cycle. The chart isolates the impact of each year’s return on lifetime outcomes using a sample of 100,000 Monte Carlo simulations. For the first 30 years when individuals are saving, the percentage of the final wealth accumulation at the retirement date that can be explained by each annual investment return grows from year 1 through year 30. With wealth accumulations so low in the early part of one’s career, the early returns have very little impact on the absolute level of wealth accumulated at the end of the savings period. But as retirement approaches, a given percentage return produces an increasing impact on the final wealth value in absolute terms, leaving individuals particularly vulnerable to these later returns. As for years 31-60, the individual has entered the distribution or retirement phase, and the chart shows the impact of each year’s return on the maximum sustainable withdrawal rate experienced by retirees. The return in year 31 represents the first year of retirement, and the result in this first year explains more than 14 percent of the final outcome for retirees.

• “Will you outlive your retirement income?”: Probabilistic (Monte Carlo) modeling is used in this illustration. Underlying each scenario presented in this analysis are certain capital market assumptions (e.g., rates of return, volatility as measured by standard deviation, correlation between asset classes). These are forward-looking rates of return developed by BlackRock. The capital market assumptions regarding rates of return for various asset classes and the probability analysis applied to these returns are key to the underlying results. In this analysis, stocks have an expected return of 7.25% and a standard deviation of 17% while bonds have an expected return of 3% and a standard deviation of 4.5%. Other investments not considered may have characteristics similar or superior to those being analyzed. There is no guarantee that actual future market returns will be consistent with these assumptions and limitations.

ADDITIONAL INFORMATION (continued) 26

• “Benefits of annuities for guaranteed lifetime income”/”Cost to generate a specified amount of annual income”: • Annuities: Annuities are long-term financial products designed for retirement purposes. In the Accumulation phase, they can help you build

assets on a tax-deferred basis. In the Income phase, they can provide you with guaranteed income through standard or optional features. You can annuitize your contract and receive lifetime income payments for no additional cost if you choose a lifetime annuity option or you may choose an optional income protection benefit. Certain variable annuities, index annuities and fixed annuities offer income protection benefits, which are subject to additional fees, age restrictions, withdrawal parameters and other limitations. With variable annuities, these types of benefits are optional and investment requirements also apply. Early withdrawals may be subject to withdrawal charges and a market value adjustment (MVA) may also apply to certain fixed annuities. Partial withdrawals may reduce benefits available under the contract, as well as the amount available upon a full surrender. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal early withdrawal tax penalty may apply. Keep in mind, for retirement plans and accounts (such as IRAs and 401(k)s), an annuity provides no additional tax-deferred benefit beyond that provided by the retirement plan or account itself.

• Variable annuities: Variable annuities offer professional money management, along with insurance features (such as a guaranteed death benefit and annuity income options) that you pay for through what is called a separate account fee. Variable annuities are subject to additional fees, including a contract maintenance fee, expenses related to the operation of the variable portfolios, and the costs associated with any optional features, if elected. Early withdrawal charges may apply. Partial withdrawals may reduce benefits available under the contract as well as the amount available upon a full surrender. An investment in a variable annuity is subject to risk, including the possible loss of principal. The contract, when redeemed, may be worth more or less than the total amount invested.

• Index annuities: Index annuities are not a direct investment in the stock market. They are long-term insurance products with guarantees backed by the claims-paying ability of the issuing insurance company. They provide the potential for interest to be credited based in part on the performance of the specified index, without the risk of loss of premium due to market downturns or fluctuations. Index annuities may not be suitable for all individuals.

• Fixed annuities: Fixed annuities offer a rate of return guaranteed by the insurance company. Although not all fixed annuities offer income protection benefits, most offer a range of income options through annuitization, including the opportunity for guaranteed lifetime income.

• Immediate annuities and deferred income annuities: These types of annuities offer a range of income options, including the opportunity for guaranteed lifetime income. These types of annuities permanently convert principal into a guaranteed income stream.

ADDITIONAL INFORMATION (continued) 27

Not FDIC or NCUA/NCUSIF Insured

May Lose Value • No Bank or Credit Union Guarantee Not a Deposit • Not Insured by any Federal Government Agency

VC 28137 (04/2017) J100842

Variable annuities are sold by prospectus only. The prospectus contains the investment objectives, risks, fees, charges, expenses and other information regarding the contract and underlying funds, which should be considered carefully before investing. Please contact your insurance and securities licensed financial advisor or call 1-800-445-7862 to obtain a prospectus. Please read the prospectus carefully before investing.All contract and optional benefit guarantees, including any fixed account crediting rates or annuity rates, are backed by the claims-paying ability of the issuing insurance company. They are not backed by the broker/dealer from which this annuity is purchased.

This material was prepared to support the marketing of annuities issued by American General Life Insurance Company (AGL) and The United States Life Insurance Company in the City of New York (US Life). Please keep in mind AGL, US Life, and their distributors and representatives may not give tax, accounting or legal advice. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. Such discussions generally are based upon the company’s understanding of current tax rules and interpretations. Tax laws are subject to legislative modification, and while many such modifications will have only a prospective application, it is important to recognize that a change could have retroactive effect as well. Please seek the advice of an independent tax advisor or attorney for more complete information concerning your particular circumstances and tax statements made in this material.

Products and features may vary by state and may not be available in all states. The purchase of an annuity is not required for, and is not a term of, the provision of any banking service or activity.

Securities and investment advisory services offered through VALIC Financial Advisors, Inc. (“VFA”), member FINRA, SIPC and an SEC-registered investment advisor. VFA registered representatives offer securities and other products under retirement plans and IRAs, and to clients outside of such arrangements.

Annuities issued by American General Life Insurance Company (AGL) except in New York, where issued by The United States Life Insurance Company in the City of New York (US Life); and by The Variable Annuity Life Insurance Company (VALIC). Variable annuities distributed by affiliate, AIG Capital Services, Inc. (“ACS”), member FINRA. All companies are members of American International Group, Inc. (“AIG”).

AIG is a leading international insurance organization serving customers in more than 100 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. All products and services are written or provided by subsidiaries or affiliates of AIG. Noninsurance products and services may be provided by independent third parties. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange. www.aig.com.