Annuity Income Riders: How to Guarantee a Paycheck You Cannot Outlive Introduction: The Longevity Fear

The greatest fear in retirement is simple: outliving your money. While market volatility is scary, the risk of having no guaranteed paycheck is a deeper, long-term anxiety.

Annuities with income riders are designed to solve this specific problem. An annuity income rider (also called a Guaranteed Lifetime Withdrawal Benefit or GLWB) is an optional add-on feature that, when purchased, customizes your annuity to provide a steady income stream that is contractually guaranteed for the rest of your life.

Understanding the Three Components of an Income Rider

Income riders work by creating a "side account" called an income-only account. This value is used solely to calculate your future income.

1.The Guaranteed Roll-Up Rate: This is a pre-determined growth rate (often 5% to 9%) that the insurance carrier guarantees will be credited to your Income Base during the deferral period. Important: This growth rate is for your income calculation only; it is typically not the cash value you can withdraw or pass to beneficiaries.

2.The Payout Percentage: When you decide to start taking income (usually based on your age), the insurance company uses an actuarial payout percentage (e.g., 5.5% at age 65). This percentage is multiplied by your Income Base to determine your guaranteed annual paycheck.

3.The Lifetime Guarantee: Once activated, the rider secures a constant payout for your lifetime, or the joint lifetime of you and your spouse. This income will never run out, even if your actual annuity account value depletes to zero. This is what provides longevity insurance.

Key Benefits for Your Retirement Plan

●Security from Volatility: Income riders provide a guaranteed minimum income benefit, protecting your paycheck against market fluctuations.

●Flexibility & Control: Unlike old-school annuitization, activating an income rider still allows you to maintain control over the underlying annuity contract value. You can stop and restart withdrawals or access any remaining cash value as needed.

●Income Growth Potential: Many riders offer the potential for income increases based on strong index performance, all while your income base grows at a guaranteed minimum rate.

Important Considerations (The Cost)

Annuity riders are an add-on and come with a cost, typically an annual fee calculated as a percentage of the annuity's account value (often between 0.1% and 1% per year). However, for the peace of mind of a paycheck you cannot outlive, many retirees find the cost to be a worthwhile investment in financial stability.

Call to Action: You shouldn't have to worry about outliving your money. Let's model a guaranteed income strategy just for you.

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