The demand for guaranteed income during retirement is higher than ever. As people look for ways to ensure they don’t outlive their savings, annuity products with guaranteed income riders have become a popular choice. These riders provide financial peace of mind, offering lifetime income and protection against market volatility.
Before guaranteed minimum living benefit (GMLB) riders were introduced, annuities only protected the principal in the event of the owner’s death. However, consumer demand for more flexible and robust options led to the development of living benefit riders. These features remain a staple in variable and fixed indexed annuities today, offering tailored solutions for retirement planning
Key Living Benefit Riders in 2025
The following are some of the most commonly used guaranteed minimum living benefit riders available today:
1. Guaranteed Minimum Income Benefits (GMIB)
GMIBs ensure a fixed income regardless of market performance. After annuitizing your contract, you can choose payments for your lifetime, a specific period, or both you and your spouse’s lifetimes. While this option offers stability, most GMIB annuities require a 10-year waiting period before income begins.
2. Guaranteed Minimum Accumulation Benefits (GMAB)
GMABs guarantee that your annuity’s value will not fall below a predetermined minimum, typically at least 100% of your investment, even during market downturns. Like GMIBs, these contracts often require a 10-year holding period.
3. Guaranteed Minimum Withdrawal Benefits (GMWB)
GMWBs allow you to withdraw a set percentage (usually 4-6%) of your investment annually until you recoup your entire principal, regardless of market conditions. If your investments perform well during this period, you could end up with more than your initial investment.
4. Guaranteed Lifetime Withdrawal Benefits (GLWB)
GLWBs offer a lifetime income stream, typically between 3-5% of your investment annually, based on your age and whether the contract is single or joint life. Some modern GLWBs include features like step-ups or roll-ups, which increase your guaranteed income if the underlying investments perform well.
5. Stand-Alone Living Benefits (SALB)
SALBs are similar to GLWBs but are designed for more flexibility. They are often attached to balanced funds and are primarily used for lifetime income in employer-sponsored retirement plans. While innovative, SALBs face adoption challenges, including portability issues when changing jobs.
6. Long-Term Care Benefits
With Americans living longer, many annuities now include options to address long-term care (LTC) costs. Some products waive surrender charges for early withdrawals to pay for LTC expenses, while others offer discounts on care services. Since 2010, withdrawals used for LTC expenses are tax-free, adding another layer of financial efficiency.
Choosing the Right Rider for Your Retirement
Each guaranteed income rider offers distinct benefits, but the best choice depends on your unique goals and retirement strategy. Some prioritize predictable income, while others focus on flexibility or healthcare-related needs.
Consulting with an annuity expert can help you navigate these options and tailor a solution that aligns with your long-term objectives. Whether it’s stability, growth, or healthcare coverage, there’s likely a rider that fits your needs.
Written by Rachel Summit
