Guaranteed Minimum Withdrawal Benefit - GMWB


DEFINITION of 'Guaranteed Minimum Withdrawal Benefit - GMWB'

A type of option that annuitants can purchase for their retirement annuities. This specific option gives annuitants the ability to protect their retirement investments against downside market risk by allowing the annuitant the right to withdraw a maximum percentage of their entire investment each year until the initial investment amount has been recouped.

BREAKING DOWN 'Guaranteed Minimum Withdrawal Benefit - GMWB'

The best aspect of this guarantee is that it protects annuitants against any investment losses that have been incurred without losing the benefit of upside gain. For example, suppose that Jamie's initial investment was $100,000, but due to downturns in the economy, the investment is now only worth $85,000. Since Jamie had purchased a guaranteed minimum withdrawal benefit with a rate of 10%, she will be able to withdraw a certain percentage each year (in this case, $8,500) until the entire $100,000 is recovered.

  1. Guaranteed Minimum Accumulation ...

    A rider on a variable annuity, which guarantees the minimum amount ...
  2. Guaranteed Lifetime Withdrawal ...

    A rider on a variable annuity that allows minimum withdrawals ...
  3. Upside

    The potential dollar or percentage amount by which the market ...
  4. Annuitant

    1. A person who receives the benefits of an annuity or pension. ...
  5. Downside Risk

    An estimation of a security's potential to suffer a decline in ...
  6. Guaranteed Earning Increase Death ...

    A type of option that annuitants can purchase for their retirement ...
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