This educational podcast from The Annuity Man fully explains how annuity income riders work and how you can determine if you need this type of contractual guaranteee.  Income Riders are typically attached to Fixed Indexed Annuities (FIAs) or Variable Annuities (VAs) at the time of application. 

Income riders are separate calculations from the accumulation value (i.e. walk away amount) of the Fixed Indexed Annuity (FIA) or Variable Annuity (VA).  Income rider valuations are phantom accounts that can only be used to calculate the first income payment.  You cannot peel off the interest or cash in the value of an income rider.  In addition, you can't transfer the income rider value to another annuity.  Only the accumulation value transfers from one annuity to another.

Income riders typically have a high annual growth percentage number that is not true yield.  With real yield on bonds or CDs (Certificates of Deposit), you are able to peel off that interest if needed.  You can't do that with Income Riders.  Income Rider values are monopoly money or a phantom account that can only be used to calculate your locked in income payment.

Income Riders typically charge a fee for the life of the policy, even after the income stream is turned on.  That annual fee is deducted from the accumulation value, which hurts the returns of those separate accounts (i.e. mutual funds) with Variable Annuities (VAs) or index call option returns with Fixed Indexed Annuities (FIAs). 

Fun with Annuities Podcast is hosted by America’s Annuity Agent, Stan Haithcock, The Annuity Man. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle. Listen in on how you can be livin’ the reality, not the dream.

In this episode, The Annuity Man discusses:

  • What is an Income Rider and how it works
  • The benefits and limitations of Income Riders
  • How Income Riders can be part of your “Income Floor” guarantees
  • Misleading Income Rider sales pitches to watch out for

Key Takeaways:

  • Income Rider values are used to calculate your lifetime income payment amount
  • High % Income Rider growth is not real yield
  • Income Rider amounts are not liquid, and cannot be transferred
  • Income Riders can be attached to an indexed or variable annuity at the time of application 

Fun with Annuities Podcast is hosted by America’s Annuity Agent, Stan Haithcock, The Annuity Man. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle. Listen in on how you can be livin’ the reality, not the dream.

Listen on Stitcher, Apple Podcasts, and Spotify. Get the best and highest confinement care and enhanced benefit quotes using Stan's proprietary annuity calculators. You can also receive all 6 of The Annuity Man Owner's Manuals for free and under no obligation and see a live feed of the best fixed rates for your specific state of residence.