Harnessing the Power of Variable Annuities With Guaranteed Minimum Withdrawal Benefits

As a Certified Financial Planner™, I am always on the lookout for strategies and products that can help my clients achieve their financial goals, and one such product is the Variable Annuity with Guaranteed Minimum Withdrawal Benefits (VA with GMWB).

So, what exactly is a Variable Annuity with GMWB?

Variable annuities are insurance products that allow you to make a series of payments or a lump-sum payment to an insurance company.  Variable Annuities, in particular, are considered securities products.   In return, the insurer promises to make periodic payments to you, either immediately or at some future date. The value of your annuity will vary based on the performance of the investment options chosen. These options typically involve a variety of mutual funds encompassing stocks, bonds, money market instruments, or a mix of all.

Now, let's talk about the GMWB. Guaranteed Minimum Withdrawal Benefits is a type of annuity option that annuitants can purchase for an extra fee. It guarantees the policyholder a steady stream of retirement income, regardless of how the annuity's underlying investments perform.

With a GMWB, you have the guarantee that you can withdraw a certain percentage of the total amount you’ve invested in your variable annuity every year until you recoup all of your original investment. This percentage is usually between 4% to 6%, depending on your contract.  It’s an excellent way to ensure you have a consistent income in your retirement years, no matter what the market does.

VA with GMWB is not for everyone and it does come with certain fees and potential tax implications. However, for those looking to secure a steady stream of income in their golden years, it could be a worthy consideration.

Keep in mind that it's crucial to evaluate your financial needs, tolerance for risk, and retirement goals before deciding on this or any financial strategy. Always seek professional financial advice tailored to your unique circumstances. If you're interested in exploring this option or have any questions about variable annuities with GMWB, I'm here to guide you.

Until next time, invest wisely and live abundantly!

Notes:  Any guarantees are based on the claims paying ability of the issuing company