What to Know Before Purchasing an Annuity Income Rider

For over a decade, annuities with income riders have become a preferred choice for many retirees without pensions or in need of supplementing their Social Security. Who doesn't want a "guaranteed return" of 5% to 7% and as high as 10% for the next 10 to 15 years without having to go through the stock market roller coaster?

I use quotation marks here because that's what many financial advisers or insurance agents overselling variable and fixed indexed annuities with income riders are promoting in order to sell you. And the worst part is the adviser might not be more knowledgeable on how the product works than you are. This is why most retirees who have this feature typically don't fully understand how it works. (Learn more by reading "Are Annuities a Solution for Baby Boomers in Retirement?")

A lot of marketing gimmicks have diluted the principal reason why you'd use an annuity income rider: to get