GLWB Lite: Lower Costs but Much Worse Benefits

GLWB Lite: Lower Costs but Much Worse Benefits

There is an emerging interest in guaranteed income solutions (annuities) for retirees among financial advisors and defined-contribution (DC) plan sponsors. At the same time, though, market dynamics have created challenges with offering certain products that provide lifetime income, in particular products with a guaranteed lifetime withdrawal benefit (GLWB). In response, some of the newer GLWBs have been introduced with lower fees and notably weaker benefits, which I refer to as “GLWB lite” in this article.

I’ll provide an overview of GLWBs, some context around the changes in the GLWB space, and analyze the expected economic benefits of these annuities versus […]

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