Response: Thanks so much for the question Donna and income riders are probably the most misunderstood, oversold and least explained feature that can be added to an annuity. I can't tell you how many annuity owners I meet with that are so proud of the fact that they own an annuity that they were bonused 10% when they made the purchase, their money is growing at a guaranteed 6% rate and life couldn't be better... Then I do the Annuity Report Card on their contract and they find out that their real spendable cash is not growing at 6%, that's either the roll up rate that their "income account" is appreciating at. The learn that they are paying a fee for that income rider which is sapping the growth of their actual cash and that the bonus that they were paid was added to their "income account" and not their cash value. Typically the red flag that brings them to me is they see that their cash value is not growing nearly enough or as much as they anticipated.
A few things to understand about income riders:
Carl Barnowski has 25 yrs. of experience as a retirement income expert specializing in principal protected annuities.