AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREThe joys and headaches of holiday travel: John PhillipsThese products can be dizzyingly complicated, involving not only decisions of what investments to pick and when to start taking an income stream but also often complex tax and estate planning considerations and analysis of benefits vs. costs. Don’t buy one unless you understand it thoroughly and/or get unbiased advice from a qualified professional, preferably one who doesn’t stand to gain or lose anything whether you buy or not. Nobody can, in the space of a newspaper column, explain everything you need to know about these annuities. But I want to at least explain the basic differences between the GMWB-for-life benefit and the GMIB, an area of much confusion and misunderstanding. With a GMWB-for-life benefit, the insurance company issuing the annuity guarantees you can withdraw for life at least a percentage of the amount you invest, often 5 percent. For example, if you invest $100,000, you can withdraw $5,000 a year for life, no matter how your investments perform. (You can always withdraw more than 5 percent but then the lifetime withdrawal guarantee would be reduced or lost.) In this example, as long as you don’t withdraw more than $5,000 a year, you will continue to receive the lifetime payments even if your actual account value goes down to zero. In that event, the insurance company will continue to pay you out of its own money. In their quest for lifetime income that can outpace inflation, baby boomers and seniors are being pitched two alphabet-soup variable-annuity guarantees: GMWBs for life and GMIBs. I mentioned these benefits briefly in a column in July about retirement income options and have received dozens of e-mails from readers wanting to know more. In the industry jargon, these initials stand for “guaranteed minimum withdrawal benefit” and “guaranteed minimum income benefit.” They are part of an ever-evolving breed of “living benefits” tacked onto variable annuities, which are tax-deferred, mutual-fund-like investments within an insurance wrapper. The benefits, for which you pay an additional ongoing fee, guarantee that you, or you and a beneficiary, usually your spouse, will receive a minimum lifetime income regardless of how your annuity investments perform. When this benefit was initially offered, the guarantee for lifetime withdrawals covered only the one person investing in the annuity. Many insurance companies have since added the option, for a slightly higher ongoing fee, of extending the lifetime withdrawal guarantee to the investor’s surviving spouse. “We realize peace of mind for many couples comes from knowing a spouse will be taken care of financially” after the first one dies, said Mark Phelan, a senior vice president of Nationwide Financial, one of the companies offering the spousal guarantee. To many financial advisers, the biggest attraction of the GMWB-for-life benefit is the potential to lock in higher guaranteed lifetime withdrawals if your investments do well. While details vary widely, these annuities typically allow you to periodically “step up” the amount you can withdraw for life if your account value has increased sufficiently. “Many of these annuities are incorporating these features on an annual or five-year basis,” said Tucker Scott, a financial adviser with Oldham Resource Group in Norwalk, Conn. Knowing that the amount you can withdraw could go up but can’t go down helps investors cope better with market volatility, Scott said. With a GMIB benefit, rather than withdraw money from your account, you must “annuitize” it, that is, give up access to your principal in exchange for lifetime payments to you or you and a beneficiary. The insurance company guarantees a minimum lifetime income regardless of investment performance or actual account value. Humberto Cruz offers personal finance advice. Write him at AskHumberto@aol.com.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!
ROUND-UP With Forest sitting deep and inviting pressure, the Rams were enjoying a lot of possession but creating little and Lolley launched a counter-attack after a Derby move broke down. After running 50 yards up the pitch, though, he hammered a shot well over.Derby were then awarded a free-kick 12 yards outside the Forest box as the game entered its final throes but to sum up the the visitors’ night, Waghorn’s delivery failed to trouble Pantilimon as he caught the ball above his head with little difficulty.Johnson then hooked a shot over as he pounced on Pantilimon’s punched clearance and Forest saw the game out comfortably after that. EFL result REPLY Forest players celebrate the goal Leeds lose at Fulham, West Brom held, Charlton’s winless run continues 3 LATEST CHAMPIONSHIP NEWS In a predictably feisty affair, Forest were managing to keep their bitter rivals at arm’s length and nearly doubled their lead when the onrushing Yates reacted brilliantly but nodded Lolley’s cross-shot inches wide.Derby made a change at half-time, bringing Florian Jozefzoon on for Tom Huddlestone, and the Dutchman tested Pantilimon four minutes after the break.After a lengthy stoppage for treatment to King, who had to be replaced by Bradley Johnson, the Reds made their first attack of the second half and it was dangerman Lolley who fired an effort just wide of Roos’ right-hand post. Benaloune strike in the second minute proved to be vital for the Reds Strugglers Wigan hold Blackburn to goalless draw in Championship A masked Yohan Benalouane struck in the second minute to hand Nottingham Forest a crucial victory against Derby County in a thrilling East Midlands derby.The Frenchman, 31, bundled the ball into the net in the opening stages which was enough to secure a vital three points over the Rams in the chase for a promotion spot. stalemate goalless Bannan penalty helps Sheffield Wednesday strengthen grip on play-off place Martin O’Neill, savouring his first East Midlands derby as Forest manager, made just the one change, with skipper Ben Watson returning in place of Lewis Grabban, who was ruled out with an Achilles injury. Andy King came in for Craig Bryson in Derby’s only alteration from the side that lost 1-0 to Millwall.Forest enjoyed a blistering opening, taking the lead after barely 70 seconds. Joe Lolley’s inswinging free-kick was headed up into the air by defender Jayden Bogle and in the ensuing panic, Daryl Murphy headed the ball across to the far post where it was bundled in by Benalouane. Hull defender MacDonald given all-clear after battle with bowel cancer Berahino hits back at b******t Johnson criticism – ‘I was in a dark place at Stoke’ GREAT NEWS Murphy headed over from Jack Robinson’s long throw before the Rams missed a glorious chance to equalise after 13 minutes. Duane Holmes slipped the ball through a sleeping Reds backline for Martin Waghorn to run on to but as Costel Pantilimon came out to narrow the angle, Waghorn curled his effort well wide of the target.Forest wasted a great opportunity as play immediately switched to the other end. Lolley took advantage of a defensive error and played in Murphy who, with just Kelle Roos to beat, took too heavy a touch and the visiting keeper was able to gather the ball.Roos saved comfortably from Lolley, before Holmes shoved Ryan Yates to the ground after a late tackle by the Forest midfielder. Both players were booked. 3 3 Lampard and O’Neill on the touchline Cardiff and Preston play out stalemate in Championship early kick-off