Our Equitable Retirement Cornerstone Annuity Review (Overall)
Equitable Retirement Cornerstone is a variable annuity that combines investment options with an optional guaranteed minimum income benefit (GMIB). The GMIB uses a separate value to calculate lifetime income, and eligible withdrawals may be available before those lifetime payments begin.
Our opinion: Retirement Cornerstone is too complicated and takes too much control away for a product we would use to create predictable retirement income. Your investment value can lose money, fees can pile up, and exercising the GMIB converts the protected benefit account into a stream of payments. We would compare a fixed indexed annuity with a guaranteed lifetime withdrawal rider first.
- Insurance company: Equitable Financial Life Insurance Company or Equitable Financial Life Insurance Company of America, depending on the contract.
- Product type: Flexible-premium deferred variable annuity.
- Income benefit: Optional GMIB for an additional charge, subject to eligibility and contract terms.
- Account value: Variable investment choices can gain or lose value.
- Access: Withdrawals are permitted under contract rules; withdrawal charges can apply.
- Contract versions: Features, fees, and withdrawal schedules vary by series and state.
Equitable Retirement Cornerstone Annuity Alternatives
There are easier ways to plan retirement income. Compare Retirement Cornerstone with the best annuities, fill out the form below, or call us at (770) 755-1565 for a free comparison.
Our Professional Opinion on Equitable Retirement Cornerstone
We like having a plan for lifetime income. But we would not choose Retirement Cornerstone to build one. It mixes market exposure, several layers of fees, and a complicated income benefit that can require you to give up control of the protected account. That is a lot to deal with when other annuities can offer guaranteed lifetime withdrawals without exposing the account to direct market losses.
The name “Protected Benefit Account” sounds reassuring, but it does not mean the investments inside it cannot lose money. The GMIB protects an income calculation under its rules. It does not guarantee that your account balance or surrender value will stay at the amount you deposited. That distinction matters a lot if you need the money or want to leave it to your family.
There is another catch. You can take permitted withdrawals before exercising the GMIB, but the amount available under those rules is not necessarily the same as the eventual lifetime payment. If the protected account reaches zero and the no-lapse conditions are met, the GMIB can begin automatically, and the resulting lifetime payment may be lower than the withdrawal amount you were receiving. We do not like that surprise in a retirement plan.
We would compare an annuity with a guaranteed lifetime withdrawal benefit, or GLWB, from a financially strong insurer. Compare the actual guaranteed dollars at your chosen start date and ask what happens to the account and the payment when the account reaches zero. A big income base on a sales illustration is not the paycheck.
Equitable is a good annuity company. The issuing Equitable life insurance companies have an A (Excellent) financial strength rating from AM Best. AM Best has the rating under review with developing implications following a proposed merger. A good rating does not protect the variable investments from market losses or make this contract easier to understand.
What We Like
- Lifetime income option: The optional GMIB can provide lifetime payments if its conditions are met.
- Pre-income withdrawals: The benefit offers an annual withdrawal amount before lifetime GMIB payments begin, subject to its rules.
- Investment choices: You can choose among available variable investment options.
- Flexible deposits: Additional contributions may be allowed under the contract rules.
- Death benefit choices: Available benefits can help protect money for beneficiaries, subject to fees and the contract terms.
What We Don’t Like
- Your money can lose value: The variable investment accounts are exposed to market losses.
- Income and cash are different: The GMIB benefit base is a calculation, not money you can surrender.
- You may have to annuitize: Exercising the GMIB converts the protected account into payments, generally ending access to that account.
- The payment can fall: If the protected account runs out and the no-lapse guarantee applies, the lifetime GMIB payment may be lower than the prior annual withdrawal amount.
- Fees can stack up: Contract expenses, investment expenses, and optional benefits can reduce the account.
- Long withdrawal charges: The surrender period depends on the series and can last for years.
- Resets and withdrawals have strings attached: They can affect income benefits and, in some cases, the waiting period.
How Retirement Cornerstone Works
You deposit money and allocate it among available investment options. The contract has an Investment Account and, when you fund the optional benefits, a Protected Benefit Account. Both use variable investments, so their values can go up or down. The contract rules limit the investment choices available in the protected account.
That name does not give your account a market-loss floor. Investment returns, withdrawals, and fees affect the actual account value. The income benefit has a separate calculation, so an illustration can show a rising benefit base even while the money you could withdraw is down.
How the Guaranteed Minimum Income Benefit Works
The optional GMIB uses a separate benefit base to determine an income guarantee. The base can grow through the rider’s roll-up and reset provisions. Depending on the terms, the roll-up includes an initial rate period and a rate linked to Treasury yields, subject to a guaranteed floor. The benefit base is not an investment return on your account and is not a lump sum you can take out.
The benefit must be selected and funded under the contract rules, and there is an extra charge. Eligibility, the roll-up, the waiting period, and any reset depend on the series and rider terms. A reset can increase the benefit base but can also restart a waiting period for exercising the GMIB. Do not accept a bigger number on an illustration without asking when the income can begin and what amount is actually guaranteed.
When you exercise the GMIB, the Protected Benefit Account is converted to lifetime payments. Any separate Investment Account value may continue, subject to the contract. That is different from the guaranteed lifetime withdrawal benefit we usually prefer, which can provide lifetime withdrawals while the contract retains an account value.
Can You Take Income Without Annuitizing?
Yes. Before lifetime GMIB payments start, you may take withdrawals from the Protected Benefit Account up to the contract’s annual withdrawal amount, subject to the rider rules. The formula can change and the annual withdrawal amount is not necessarily equal to the lifetime GMIB payment.
Here is where it gets tricky: if the Protected Benefit Account reaches zero and the no-lapse guarantee is still in effect, the GMIB is exercised automatically. The lifetime payment can be less than the annual withdrawal amount you received before the account ran out. Any separate Investment Account can remain in force, but the protected account’s guaranteed death benefit ends when the GMIB is exercised.
We would rather know what paycheck is guaranteed under the circumstances that matter to you. Contact us for a free income heat map based on your age, state, deposit, income start date, and whether the income covers one or two people.
How Much Does Retirement Cornerstone Cost?
There can be several layers of costs: the base contract charge, expenses inside the underlying investment options, and charges for the GMIB and selected death benefits. Costs depend on your contract series and elections. These are real charges that reduce the money invested, even when the investments have a bad year.
Some versions offer a credit or bonus, but higher fees can more than offset it. Do not buy the bonus and ignore the bill. Ask for the total annual cost in dollars and the effect on your account and death benefit, then compare the guaranteed income with other annuities.
Withdrawals and Surrender Charges
The contract permits withdrawals, but taking too much too early can trigger withdrawal charges. Schedules vary by series. For example, certain versions have seven- or nine-year withdrawal charge periods. Additional contributions and state rules can affect the schedule, so check your specific contract before assuming all of the money is free to leave.
A withdrawal can avoid a surrender charge and still hurt your income benefit. During the roll-up period, permitted withdrawals can reduce the roll-up that would otherwise be credited. Withdrawals above the annual withdrawal amount can reduce the benefit base and may end the no-lapse guarantee. That stinks if you thought “free withdrawal” meant it could not affect your retirement paycheck.
What Happens When You Die?
Retirement Cornerstone offers death benefit choices, and the amount available to beneficiaries depends on the benefits selected, investment performance, withdrawals, and contract terms. The income benefit base is not automatically the amount your family receives. Fees and withdrawals can reduce the account and may affect the benefit.
If your spouse is your beneficiary, ask whether spousal continuation applies and how continuing the contract affects any benefits. Once the GMIB is exercised, the protected account’s guaranteed death benefit terminates; any continuing payments depend on the selected income option.
Pros and Cons Compared With Other Annuities
- Compared with a MYGA: A fixed-rate annuity guarantees interest for a set term. Retirement Cornerstone offers variable investment options and an optional income benefit, but its account value can fall.
- Compared with a fixed indexed annuity: We prefer comparing an FIA with a GLWB for protected lifetime income. Its index credit does not become negative because the index falls, although fees and withdrawals can still reduce the account.
- Compared with a RILA: A registered index-linked annuity can still expose you to losses beyond its buffer or floor. Retirement Cornerstone also exposes variable investments to losses. We would not choose either just to get a retirement income guarantee.
- Compared with other variable annuities: Cornerstone offers an income benefit and withdrawal choices, but the layered costs and GMIB rules deserve a hard look. Compare the actual lifetime payment, fees, and access with the alternative.
Who Should Look Elsewhere?
If you want protected savings, simple access, or a lifetime paycheck that does not require converting the protected account into payments, we would start somewhere else. We would also think twice if you do not understand what happens to your income when the Protected Benefit Account reaches zero.
What We Recommend
We would pass on Retirement Cornerstone for a straightforward retirement income plan. We do not like combining market risk, layered fees, and an income benefit this complicated when a fixed indexed annuity with a GLWB may do the job with fewer moving parts.
Contact The Annuity Expert for a free, no-obligation comparison. We can compare guaranteed income, access to your money, costs, and the amount that may be left to your family. Call (770) 755-1565 or use the form below.
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