The Vanguard Lifetime Income Program is an immediate annuity that can provide a monthly income stream guaranteed for life, as well as options under which additional payments can be made to a spouse or other beneficiary after the annuitant’s death. The program is expected to be available in the fall of 2003, according to a news release.
The program will be offered with a fixed or variable payment option. The fixed payment option works like a typical annuity payout. Investors will receive identical payments each month based on the amount of their initial purchase, the annuity option selected, the frequency of annuity payments and their life expectancy. An option to increase the fixed payment annually by a specified percentage is also available.
Investors that choose variable payments may allocate their lump-sum purchase among a selection of Vanguard investment offerings, and will receive payments based on the performance of their investment options. However, with the potential for growth, the variable payments option also carries a possibility for loss.
Some investment alternatives available include:
- Vanguard Inflation Protected Securities Fund
- Vanguard GNMA Fund
- Vanguard LifeStrategy Funds.