The Guaranteed Lifetime Withdrawal Benefit (GLWB) is the most popular income rider on fixed indexed annuities, providing guaranteed lifetime income while maintaining access to your account value. Unlike annuitization, a GLWB lets you keep control of your money.
How GLWBs work:
1. Income Base: A separate value used only for calculating income (not withdrawals)
2. Roll-Up Rate: Guaranteed growth rate for income base during deferral (e.g., 5-7% annually)
3. Payout Rate: Percentage of income base you can withdraw annually (based on age)
4. Lifetime Guarantee: Payments continue for life, even if account value reaches zero
Example GLWB mechanics:
- Premium: $100,000
- Roll-up rate: 6% simple
- Deferral period: 10 years
- Income base after 10 years: $160,000
- Payout rate at age 65: 5%
- Annual guaranteed income: $8,000 for life
Key GLWB features:
- Income base grows by roll-up even if index credits 0%
- Account value continues to participate in index gains
- You maintain access to account value (subject to surrender rules)
- Excess withdrawals may reduce guaranteed income
- Spousal continuation options available
GLWB vs. annuitization:
- GLWB: Keep access to remaining account value
- Annuitization: Lose lump-sum access for higher payments
- GLWB: Account may grow if index performs well
- Annuitization: Fixed payments regardless of performance
For Ocala retirees seeking guaranteed lifetime income with flexibility, a GLWB provides the best of both worlds—income security with continued account access.
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