Final answer:
Lifetime Income Withdrawals for GLWB annuities are based on withdrawal percentages applied to the investment or account value, depending on the contract, and may increase with age.
Step-by-step explanation:
For Guaranteed Lifetime Withdrawal Benefits (GLWB) annuities, Lifetime Income Withdrawals are typically determined based on the annuity contract. The insurance company usually guarantees a certain withdrawal percentage, which is then applied to either the original investment or the account value, depending on the terms of the product. This percentage varies based on the age of the annuitant at the time of the first withdrawal, and it often increases for older policyholders.
Example Calculation
If a 65-year-old individual invests $100,000 in a GLWB annuity and the policy stipulates a 5% withdrawal rate, the Lifetime Income Withdrawal would be $5,000 annually. It's important to note that withdrawing more than the specified amount could reduce the future guaranteed withdrawals and the remaining account value.