Solutions 4 Financial Independence: 05/18/17

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BRIDGEPORT, W.Va (WDTV) - Question: "I have an annuity plan with a lifetime income rider. What does that mean?"

Answer: (John Halterman, Beacon Wealth Management) "There's a lot of different annuities out there and I am not sure which one you have. But I understand lifetime income riders. Let's back up a minute and talk about whats the issue here.

"For many people, when you retire what you worry about is running out of income. So the challenge is you have to be able to make more money from your investments than the income you take. Unfortunately if you end up taking more than what you make, you end up with zero.

"You also have to factor in that the markets can erode your values. A lot of times what these lifetime income riders are designed to do, is their designed to provide you income that you can not out live regardless of market conditions.

"I will say the challenge is though you have to live within the parameters. Typically the parameters usually work out to be a percentage. That percentage is somewhere between four to six percent. It's going to vary for each type of annuity.

"Also whats going to vary is the age you have to start. So as an example, lets say a person has $500,000, and they have a five percent rider. What that means is if they start at age 65 that typically means that you can take out five percent or $25,000 for the rest of your life, regardless if your principle runs out or not.

"So the idea is to provide you an income that you can not out live."