Despite more than a half century of research detailing the potential value of guaranteed lifetime income products for retirees, sales of annuities, especially traditional products such as single premium immediate annuities (SPIAs), remain low. There are theories to explain why this “annuity puzzle” persists, but one notable barrier to annuitization is the irrevocable transfer of the premium common among annuities.
A product that addresses this concern, which has been available since the 1990s, is an annuity with a guaranteed lifetime withdrawal benefit (GLWB) feature,1 which is common with both variable annuities (VAs) and fixed indexed annuities (FIAs). These products guarantee some minimum level of lifetime income even if the underlying account value goes to zero
