GLWB (Guaranteed Lifetime Withdrawal Benefit)
A living-benefit rider that guarantees a defined withdrawal amount for life, regardless of account value.
A guaranteed lifetime withdrawal benefit (GLWB) is an optional rider that lets the owner withdraw a defined amount every year for life, even if the underlying account value falls to zero. It is usually bought for an explicit annual charge and works from a separate benefit base that is used only to calculate the withdrawal - it is not a cash amount the owner can take as a lump sum.
- —A GLWB provides lifetime income without giving up ownership of the account value, which is the main difference from traditional annuitization.
- —The rider charge is generally assessed against the benefit base, not the account value, so it can keep applying even in a flat year.
- —The guaranteed withdrawal percentage is set by the age income begins, and it usually steps up in bands rather than continuously.
- —Withdrawing more than the guaranteed amount in a year - an excess withdrawal - can permanently reduce the guarantee.
A GLWB applies a withdrawal percentage to a benefit base to determine the guaranteed annual amount. The percentage typically depends on the age at which withdrawals begin and whether one or two lives are covered.
The benefit base is a bookkeeping figure used to calculate income - it is generally not an amount available on surrender. Withdrawals above the guaranteed amount commonly reduce or reset the base, often permanently.
How a GLWB actually pays
Two ledgers run side by side. The account value is real money: it rises with credits, falls with withdrawals and charges, and is what a beneficiary or a surrendering owner receives. The benefit base is a bookkeeping figure used only to compute the guaranteed withdrawal, and it may grow at a stated roll-up rate during the deferral years.
Once income starts, the owner withdraws the guaranteed percentage of the benefit base each year. Those withdrawals come out of the account value first. If the account value eventually reaches zero while the owner is still living, the carrier continues the same annual amount from its own general account for life.
The withdrawal percentage and why age drives it
The guaranteed percentage is set by the age at which the first withdrawal is taken, and typically by whether the guarantee covers one life or two. Because the carrier is funding an open-ended obligation, a later start means a shorter expected payment period and a higher percentage.
| Age band at first withdrawal | Illustrative single life | Illustrative joint life |
|---|---|---|
| 55-59 | 4.0% | 3.5% |
| 60-64 | 4.5% | 4.0% |
| 65-69 | 5.0% | 4.5% |
| 70-74 | 5.5% | 5.0% |
| 75-79 | 6.0% | 5.5% |
| 80+ | 6.5% | 6.0% |
What the rider costs and what it does not do
GLWB charges commonly run between about 0.75% and 1.5% a year, and in many contracts the charge is calculated against the benefit base rather than the account value. Because the benefit base is often larger, the effective drag on the real account value can be higher than the headline percentage suggests.
A GLWB does not guarantee growth in the account value, does not protect against inflation unless the contract adds an increasing-income feature, and does not make the benefit base withdrawable. Owners who never turn income on generally pay the charge for a benefit they never use, which is one of the more common findings in an in-force review.
Frequently asked questions
- Is the benefit base money I can withdraw?
- No. The benefit base exists only to calculate the guaranteed annual withdrawal. The surrender value, death benefit, and any lump sum are based on the account value.
- What happens if I take more than the guaranteed amount?
- That is an excess withdrawal. Most contracts reduce the benefit base proportionally to the excess, which can permanently lower every future guaranteed payment. Checking the contract's excess-withdrawal language before any large distribution matters.
- Do I have to annuitize to use a GLWB?
- No, and that is the core appeal. The owner keeps control of the account value and any remaining balance passes to beneficiaries, unlike traditional annuitization where the payment stream typically replaces the account.
- Is a GLWB worth the annual charge?
- It depends entirely on whether the guarantee is actually used and on the owner's other income sources. A rider whose income is never switched on is a cost with no delivered benefit, while one that pays past a zero account value can deliver considerably more than was paid in. This is an individual suitability question for a licensed professional.