A retirement income planning strategy can help to ensure that your clients’ assets last as long as their retirement. As financial representatives, you are already aware that wise planning can help make retirement dreams become reality.
But are you aware that variable annuity products with living benefit riders can be part of the strategy? They can help your clients generate the additional retirement income they need to achieve their retirement dreams.
Forget what you knew about annuities ten years ago. According to Spectrem Group, April 2008, “Advisors views on annuities are dated thanks to the addition of riders, which add more options for investors that didn’t exist in years past.” Spectrem also states that “57 percent of advisors do not include annuities as part of the strategy to provide retirement income.” Maybe they just don’t know what they’re missing.
There are several types of optional riders now available on some variable annuities. This article will focus on two riders that are currently being utilized in the financial industry: Guaranteed Lifetime Withdrawal Benefit (GLWB) riders and No Withdrawal Charge (“C-Share”) riders.
Annuity income your clients can’t outlive
As flexible retirement vehicles, some variable annuities offer optional living benefits, such as GLWB riders, that can help protect your clients’ retirement assets from market downturns and potentially eliminate the risk of outliving their income (Guarantees are based upon the claims-paying ability of the issuing company and do not apply to the investment performance or account value of the underlying variable portfolios.). Think of it as income your clients can’t outlive.
GLWB riders are designed to allow your clients to take withdrawals after a certain age and continue for their lifetime, regardless of market downturns. When your clients purchase a variable annuity with a GLWB rider, they may have an option to focus on accumulation until they decide to start taking withdrawals, or to take immediate withdrawals. Withdrawals of policy earnings are taxable and, if taken prior to age 591/2, a 10 percent penalty tax may also apply. When they have this option, they control how to use the GLWB rider to fit their retirement strategy. A few GLWB riders may also allow your clients to choose when to activate and begin paying for the rider at any time after a certain age. Be sure you compare variable annuities with GLWB riders before recommending them to your clients since not all GLWB riders offer the same features.