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Fixed Annuity Income Riders

The fixed annuity is an important tool to help you financially in retirement.  In the Leavenworth Times’ “Dollars and Sense: Income riders a way to achieve retirement goals,” Larry Martin discusses the different income rider options available with a fixed annuity.  I previously blogged about his retirement scenario related to a couple needing to save $345,000 and get a 6% return to reach their desired retirement savings.  Deferred fixed annuities are a good option for this couple because income rider additions can get them to their 6% return.  Martin recommends two fixed annuity documents to help people learn all of the basics related to fixed annuities.  The NAIC’s “A Buyer’s Guide to Fixed Deferred Annuities” and NAFA’s “The Need to Insure Retirement with Fixed Deferred and Immediate Annuities” both offer in depth information for those interested in fixed annuities.

Fixed deferred annuities are not only safe, they also allow you an opportunity for growth of your investment.  In addition to a basic fixed rate of return, fixed indexed annuities offer the benefit of being linked to a specific stock market index, giving you the possibility for even greater growth.  Fixed annuity rates are not at their highest right now, but with an income rider, you could get a 6% return.  You don’t just want to look for the insurance company offering the highest return however.  Look for a strong company with a high financial strength rating and compare the details and options then.  Some weak insurance companies offer higher rates, but may not be around to pay you out over your lifetime.  You main annuity account is your accumulation account and any income rider will be a separate account growing at a guaranteed rate.  GLWBs and GLIBs are two examples of income accounts.  The guaranteed rate of an income rider helps provide income over your entire lifetime.

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