Why Guaranteed Lifetime Withdrawal Benefits (GLWBs) Beat Old Retirement Rules
Scenario
The 4% Rule says you can withdraw 4% of your retirement savings each year and expect it to last 30 years. But the financial world has changed. Inflation is higher, life expectancies are longer, and market volatility is worse. Sticking to the 4% Rule now could leave you out of money when you need it most.
The solution? A Guaranteed Lifetime Withdrawal Benefit (GLWB) rider on a fixed index annuity. It provides a reliable income stream for life—even if the account runs out of money—and pays more than the 4% Rule.
1. Inflation Is No Longer Predictable
Key stat: Inflation has bounced between 3% and 9% since 2021.
✔ 4% Rule adjusts for inflation
✘ Your real purchasing power may still shrink
Who Needs This: Retirees on fixed incomes or drawing from savings
Who Doesn’t: Those with inflation-adjusted pensions
Fix It With GLWB: GLWBs offer payouts as high as 5–8%, often with inflation adjustments, keeping your income stable over time.
2. Bond Yields Can’t Keep Up
Key stat: Long-term bonds still yield less than what retirees need to sustain 4% withdrawals
✔ Bonds add stability
✘ But today’s yields often fall short of income needs
Who Needs This: Conservative investors relying on income from bonds
Who Doesn’t: Retirees with guaranteed sources of income
Fix It With GLWB: GLWBs provide contractually guaranteed income no matter what interest rates or the market do.
3. People Are Living Much Longer
Key stat: A 65-year-old couple has a 50% chance that one will live to age 93
✔ More years in retirement
✘ Higher risk of outliving savings
Who Needs This: Anyone retiring before age 70
Who Doesn’t: Those with shorter life expectancies or terminal illnesses
Fix It With GLWB: GLWBs guarantee income as long as you live, no matter how long that is—even past age 100.
4. Sequence of Returns Risk Is a Major Threat
Key stat: A downturn in your first five retirement years can cut your income by 50%
✔ Markets recover over time
✘ But early losses devastate portfolios if you’re withdrawing money
Who Needs This: Retirees withdrawing from 401(k)s or IRAs
Who Doesn’t: Those with a fixed monthly income from annuities or pensions
Fix It With GLWB: With a GLWB, income never drops due to market losses, even if your account goes to $0.
5. Healthcare and Long-Term Care Costs Are Exploding
Key stat: Out-of-pocket costs may exceed $315,000 per couple in retirement
✔ Medicare helps
✘ But it doesn’t cover everything—especially long-term care
Who Needs This: Middle-income retirees with no long-term care plan
Who Doesn’t: Veterans or those with rich employer retiree health coverage
Fix It With GLWB: A GLWB ensures your retirement income continues, freeing up other resources to pay for unexpected health needs.
6. Spending in Retirement Isn’t Linear
Key stat: Most retirees spend more in their early and late years, not evenly
✔ 4% Rule is simple
✘ But doesn’t reflect real spending patterns
Who Needs This: Retirees who plan for travel, home upgrades, or caregiving
Who Doesn’t: Those with minimal lifestyle variation
Fix It With GLWB: GLWBs offer flexible payout strategies, and many allow for joint income, so both spouses are protected.
7. Markets Are Too Volatile for Simple Rules
Key stat: The S&P 500 had four 20% swings between 2020 and 2024
✔ Long-term returns are solid
✘ But short-term losses can derail retirement
Who Needs This: Retirees with heavy stock exposure
Who Doesn’t: Retirees relying on guaranteed income
Fix It With GLWB: GLWBs remove market risk from income planning, allowing you to stay invested for growth without jeopardizing your paycheck.
Book A Call
The 4% Rule worked in the 1990s. It doesn’t work now. A fixed index annuity with a Guaranteed Lifetime Withdrawal Benefit (GLWB) offers the highest payout rates available today, protects against market downturns, beats inflation, and guarantees income even if your account runs dry.
Contact The Annuity Expert for a free quote and comparison of GLWB annuities. Get the income you deserve—without the risk.
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