Annuities With Guaranteed Benefits

Annuities that promise minimum income sound great, but they can be complex and costly.

EDITOR'S NOTE: This article was originally published in the February 2009 issue of Kiplinger's Retirement Report. To subscribe, click here.Even in this tumultuous market, Tom Gilson of Jensen Beach, Fla., can withdraw 6% a year from his savings without worrying about running out of money. How?

The 68-year-old retiree has a variable annuity with a guaranteed minimum income benefit that lets him take out 6% of the highest value his investments ever reach, no matter what the market does after that. His investments are now worth only half of the balance that is used to calculate his guarantee. "Needless to say, that is pretty substantial," he says.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.