Annuitization vs. Income Riders
The Annuity Man
Annuities are the only product strategy on the planet that provides an income stream that you can never outlive. It's a monopoly that only annuities can offer.
Lifetime income with annuities can be contractually produced using annuitization or income riders. Both provide a payment stream you can't outlive, but each take a different contractual path to get you to that lifetime income goal.
Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), and Qualified Longevity Annuity Contracts (QLACs) are all annuitization type product strategies. Annuitization means to create payments, and all annuity lifetime income guarantees are primarily priced based on your life expectancy(s) at the time you start the payments. Interest rates play a secondary pricing role. In addition, all annuity lifetime income guarantees (regardless of type) are a combination of return of principal plus interest. In a non-IRA (i.e. non-qualified account), the income stream from annuitization can be tax favorable because you only pay taxes on the interest portion of that payment. Inside of an IRA (i.e. qualified account), all of the income stream coming out would be fully taxable at ordinary income levels.
Income Riders are primarily withdrawal (i.e. draw down) products, but still provide a lifetime income stream that is primarily based on your life expectancy at the time you start the payments.
When looking for the highest contractual guaranteed payout for your specific situation, you should always shop both annuitized products and income riders for the highest contractual number.
Contact Stan The Annuity Man to get annuitization and income rider quotes using the best annuity calculator available. You can also see a live feed of the best MYGA fixed rates and get 7 published books on annuities for free and under no obligation.