GUARANTEED LIFETIME WITHDRAWAL BENEFIT
Income Rider Calculator
Sort of like a pension, income riders may be added to Fixed Index Annuities to pay a higher insured income rate depending on age and deferral period, guaranteed for life.
Estimate Income
Use this calculator to see real time guaranteed income rates for Fixed Index Annuities with Guaranteed Lifetime Withdrawal Benefits (Income Riders). Rates subject to change until applied for.
This number determines the size of your annuity. Enter a custom above or choose a preset below.
What This Number Is
The figure you'll see is guaranteed lifetime income: what a carrier will contractually pay you every year once your income starts, for as long as you live, whether or not the market cooperates.
It is a rate the carrier has filed and is bound to honor, rather than a projection of what a market might do. That is what separates it from a withdrawal plan, which works right up until the balance runs out.
- Waiting longer before income starts almost always raises the payment.
- The same money buys different income from different carriers, which is the whole reason to compare.
- Your state matters, because not every product is approved everywhere.
THE POWER OF DEFERRAL
Every Year You Wait, the Paycheck Grows
An income rider works on a number of its own, kept alongside your account balance. The carrier calls it the benefit base, and grows it by a set amount every year you leave the income switched off. When you turn it on, a percentage of that number becomes your payment for life.
Two things move in your favor while you wait. The base keeps climbing, and starting later earns you a higher percentage of it. That is why deferring five years usually moves the figure further than anything else on the form.
So the answer worth getting right is when you actually need this money to start. Settle that one and the rest of the comparison gets much simpler.
Covering one life or two
What Adding Your Spouse Buys
Both figures are on the table above, so you can see the whole trade before you make it. One of them covers a life. The other covers a household.
| What is being compared | Single life | Joint life |
|---|---|---|
| Who it pays | Single lifeYou, for as long as you live. | Joint lifeYou and your spouse, for as long as either of you is here. |
| The yearly figure | Single lifeHigher, because the carrier is covering one life. | Joint lifeAround a tenth less, because the carrier is covering two. |
| If one of you goes first | Single lifeThe payments end, and whatever account value is left goes to your beneficiaries. | Joint lifeThe payments carry on at the same figure, for as long as your spouse lives. |
| Who it usually suits | Single lifeSomeone on their own, or a couple who each have an income of their own. | Joint lifeA couple who want this money still arriving for whoever is left. |
A general comparison. How a particular contract treats death benefits and survivor income varies, and should be confirmed against the contract itself.
What holds that number up
Four Things Working Behind Your Retirement Paycheck
Four parts of the contract decide that figure. Two of them are the carrier's job, and two are yours to steer.
The paycheck outlasts the balance
Once the income switches on, the carrier owes you that payment every year you are alive, including the years after the account behind it has run down to nothing. That is what the rider charge buys: usually around one percent a year, taken out of the account value and never out of your payment.
The index can only add
Your money is not in the market. It follows an index and gets credited when the index rises, up to a cap or a share of the move, and when the index falls it credits nothing rather than taking anything away. That floor is what lets a carrier put a payment in writing decades ahead.
You choose the day it starts
Nothing begins until you say so. Every year the income stays off, the benefit base behind it steps up and you get a year older, and both of those raise the payment you eventually switch on. The day you pick sets the figure for the rest of your life, which makes it the one number here you control completely.
The money stays reachable
Most contracts let you take a share of the account every year, often ten percent, with no charge at all. Beyond that a surrender schedule applies for a set number of years and then it is gone for good. Match the contract to the part of your savings you are not planning to spend soon, and that schedule stays out of your way.
Questions People Ask About Income Riders
Is this income really guaranteed for life?
Yes, for as long as the contract is in force and its terms are met. It is a contractual obligation of the insurance company, which is why the financial strength rating is on every row and why the calculator lets you set a minimum.
What happens to the money when I die?
Any account value left goes to your beneficiaries. On a joint contract the payments carry on for your spouse; on a single-life contract they end with you.
Can I still get at the money?
Yes. There is a free amount every year, usually around a tenth of the account, and taking that costs you nothing. Go past it and surrender charges apply in the early years, and the income the rider pays comes down with it.
Does this income count toward my required minimum distribution?
If the contract holds IRA money, yes. The payments come out of the account, so they count toward the amount you have to take that year. For a lot of people the income is already at or above that figure, which means the requirement looks after itself and nothing else has to be sold to meet it.
Where it needs a closer look is if the payment lands short of the requirement, or if you hold other IRAs alongside this one.
How is this different from a fixed rate annuity?
A fixed rate annuity guarantees a rate for a set number of years and then hands the money back. An income rider guarantees a payment for as long as you live, however long that turns out to be. One is about a balance on a date, the other about a paycheck with no end date.
What if the market falls?
Your account value does not follow it down. The index credits either something or nothing, never a loss, and the income the rider has promised is not affected by market performance at all.
Is now a good time to buy one?
Payout rates move with interest rates, so the timing does count for something. It counts far less than getting the deferral right, which is where the real difference is.
Ready to Discuss Annuities with an Advisor?
Fifteen minutes with Steve Jurich, AIF®, CAS®, on when to switch the income on and what waiting is worth.