Guaranteed Minimum Income Benefit (GMIB)
Candlefocus EditorGMIBs are typically offered as an optional rider to variable annuities. These annuities are attractive to investors due to their potential for earning higher returns from the underlying investments. Variable annuities are popular among retirees due to their potential to increase their income while also providing them with a suitable level of protection against market downturns. GMIBs greatly enhance the potential of variable annuities to deliver a steady stream of income, regardless of stock market performance.
GMIBs are a great way to protect against the risk of outliving one’s savings while still building up a valuable retirement income. However, there is an added cost associated with GMIBs that should be taken into consideration. These riders may tack on additional fees and charges to the annuity buyer and could potentially diminish any gains that could be realized in the underlying investment. It’s important to understand the fees and charges associated with GMIBs before signing up for them.
Overall, GMIBs are an attractive option for those looking to guarantee at least some level of income from their annuity once it has annuitized. While there is an added cost to these riders, the potential for a steady stream of income could be worth the added expense. Investors should carefully weigh the pros and cons of GMIBs before deciding whether or not to incorporate them into their investing strategy.