Study: Sustained low interest rate environment and market volatility putting retirement security at risk

  Study: Sustained low interest rate environment and market volatility putting
  retirement security at risk

  Insuring retirement income can help protect assets, Prudential study finds

Business Wire

NEWARK, N.J. -- December 17, 2012

Sustained low interest rates and market volatility are putting Americans’
retirement security at risk, according to new research developed by Prudential
Financial, Inc. (NYSE: PRU).

According to the paper, “Should Americans Be Insuring Their Retirement
Income?” sustained low interest rates, market volatility and longevity risk
are three of the most significant risks to Americans’ retirement security. If
interest rates continue to be low for an extended period, retirement assets
invested in conservative investments will have little investment growth and
are at risk of being exhausted earlier than expected, according to the paper.
In addition, continued volatility of investment returns in the equity markets
creates significant “sequence of returns” risk, or the challenge of making up
for lost returns after a significant market downturn, particularly just before
or just after retirement. These challenges, the paper notes, are compounded by
the fact that people are living longer, which further increases the chance of
exhausting retirement savings.

The paper includes research provided by Ernst & Young’s Insurance and
Actuarial Advisory Services practice and discusses the likelihood of the
average retiree exhausting his or her retirement savings based on a number of
scenarios, including a sustained low interest rate environment and continued
market volatility.

“While the majority of Americans insure their most valuable assets in order to
safeguard against significant financial loss, many don’t think to insure their
ability to generate lifetime income,” said Bob O’Donnell, president of
Prudential Annuities. “Today’s guaranteed income products were designed to
help protect retirees from running out of income in retirement, regardless of
market conditions or increased longevity.”

Social Security and traditional pensions offer protection against these risks;
however, this protection does not exist for income created from personal
savings, unless individuals choose to put it in place. The paper argues that
Americans should consider insuring retirement income through products such as
individual annuities or guaranteed income products built into defined
contribution plans to provide the peace of mind provided by other types of

“Life insurance helps families manage the risks of not living as long as
expected, while guaranteed retirement income products help Americans manage
the risk of outliving savings in retirement,” said O’Donnell. “This paper
clearly demonstrates the real risks of a sustained period of low interest
rates and market volatility to Americans’ retirement security, and the
potential benefits of strategies that provide guaranteed income through

Ernst & Young’s Retirement Analytics^sm model projected 2,000 Monte Carlo
simulations of investment returns, interest rates and lifespans.

Investors should consider the contract and the underlying portfolios’
investment objectives, risks, charges and expenses carefully before investing.
This and other important information is contained in the prospectus, which can
be obtained from your financial professional. Please read the prospectus
carefully before investing.

Variable annuities are issued by Pruco Life Insurance Company (in New York, by
Pruco Life Insurance Company of New Jersey), Newark, NJ and distributed by
Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential
Financial companies and each is solely responsible for its own financial
condition and contractual obligations. Prudential Annuities is a business of
Prudential Financial, Inc.

Annuity contracts contain exclusions, limitations, reductions of benefits and
terms for keeping them in force. Your licensed financial professional can
provide you with complete details.

A variable annuity is a long-term investment designed for retirement purposes.
Investment returns and the principal value of an investment will fluctuate so
that an investor’s units, when redeemed, may be worth more or less than the
original investment. Withdrawals or surrenders may be subject to contingent
deferred sales charges. Withdrawals and distributions of taxable amounts are
subject to ordinary income tax and, if made prior to age 59½, may be subject
to an additional 10% federal income tax penalty.

Optional benefits may not be available in every state and may not be elected
in conjunction with certain optional benefits. Optional benefits have certain
investment, holding period, liquidity, and withdrawal limitations and
restrictions. The benefit fees are in addition to fees and charges associated
with the basic annuity.

The benefit payment obligations arising under the annuity contract guarantees,
rider guarantees, or optional benefits and any fixed account crediting rates
or annuity payout rates are backed by the claims-paying ability of the issuing
insurance company. Those payments and the responsibility to make them are not
the obligations of the third party broker/dealer from which this annuity is
purchased or any of its affiliates. They are also not obligations of any
affiliates of the issuing insurance company. None of them guarantees the
claims-paying ability of the issuing insurance company. All guarantees,
including optional benefits, do not apply to the underlying investment

Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has
operations in the United States, Asia, Europe, and Latin America. Prudential’s
diverse and talented employees are committed to helping individual and
institutional customers grow and protect their wealth through a variety of
products and services, including life insurance, annuities, retirement-related
services, mutual funds and investment management. In the U.S., Prudential’s
iconic Rock symbol has stood for strength, stability, expertise and innovation
for more than a century. For more information, please visit



Prudential Financial, Inc.
Lisa Bennett, 973-802-2894
Simon Locke, 973-802-7373
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