Page 40 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

In the past you had to annuitize or give up your pool of money to take
advantage of this. Now, for your parents, that wasn’t such a big deal.
They were used to thinking of the “defined benefits”: the income
stream. You, however, have been taught to look at the “defined
contribution”: the pot of money you have invested. When you come at
it from that perspective, it’s much less attractive to annuitize, even

though that’s the best way to maximize income.

So once again, the industry responded with brand new strategies just for
you. They came up with something called the income rider. The income
rider allows you to take advantage of the insurance company’s ability to
provide you income based on the “law of large numbers” without

giving up control of your money.

Imagine your money is divided into two pools. One pool is your “walk
away balance.” This is driven by the indexing we discussed earlier in
this book. When the market goes up, so does your balance. When the

market goes down, you are locked in, never to lose a dime. After the
surrender period, you can walk away with this balance, less any
withdrawals.

Now, the other pool is comprised of a source of money for lifetime
income. And it grows not just based on the indexing, but also by a fixed

guaranteed. That guarantee is usually in the 7-8% range, so it is
guaranteed to double every 10 years. So, if you started 20 years ago
with $100,000, today you would have a minimum of $400,000 for
income, guaranteed.

31