“Wallet 2” is an accounting entry referred to as your “income base.” It is not real money. It is an accounting method used to figure out the amount of guaranteed income you can withdraw if you trigger the rider. There is often a withdrawal percentage that is tied to your age. For instance, the rider might say you can withdraw 4% of the greater of the actual contract value (Wallet 1) or the income base (Wallet 2) if you begin taking withdrawals between ages 60 and 64, 4.5% if you begin between ages 65 and 69, and 5% if you begin taking income at age 70 or later. Wallet 2 is used to provide a minimum known outcome. Still, if the investments do better than the guarantees provided by Wallet 2, then your income could be greater than the minimum amount.
Finding an Annuity with an Income Rider
They are some really great products out there, but as with any investment, do your homework first. When looking for a variable annuity that offers a GLWB rider or a LIBR, here’s what to look for: If you’re looking for an annuity that has a guaranteed income feature, search AnnuityFYI, which keeps an updated list of competitive annuities that offer either a GLWB rider or an LIBR.
