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Hi, I’m *** Ellis for Annuity FYI, with an overview of the Lifetime Withdrawal Benefits.
Lifetime Withdrawal Benefits are optional riders that can be attached to many variable
annuities. They guarantee a steady stream of payments for the rest of your life. The
payments can never go down but they might go up. For example, suppose you invest $100,000
in an annuity with a five percent lifetime withdrawal benefit rider. You can withdraw
five thousand dollars per year for the rest of your life, even if your account balance
goes to zero.
Now, many investors like lifetime withdrawal benefits because if your account value goes
up, you can “lock in” the higher value, and increase the amount on which the withdrawal
percentage is based. In the deferral period, even if your account value decreases, your
benefit base will typically compound by some guaranteed rate, such as five to ten percent.
For folks who plan a lengthy retirement, lifetime withdrawal benefits give the financial confidence
of regular, guaranteed payments, and ensure you won’t outlive your income, even if the
market declines.
However, there are some things to be careful of. Fees for lifetime benefit riders vary
widely, and they do not always correlate with the quality of the benefit. So be sure to
compare multiple products. It’s also important to make sure that the withdrawal amounts are
consistent with your income needs. Most allow you to withdraw between five percent and seven
annually.
There is a wealth of additional information on AnnuityFYI, and you can also email us,
or call us to speak with a live person. For AnnuityFYI, I wish you Safe Investing, and
remind you that annuities can give you the peace of mind of guaranteed lifetime income.