We will ring in 2023 with the highest income levels in over 2 years

Michael Freeman

Key Takeaway:  We will ring in 2023 with the highest income levels in over 2 years for both FIAs and VAs. 

We will ring in the new year with the highest income we have seen in a while. With the recent roll-up and withdrawal rate increases, single option income has reached its highest level since before 2020. With last quarter's numbers in, we continue to see a rise in overall income amounts. An annuity with a guaranteed income benefit gives an advisor a planning tool for future income needs. While it is important to talk about accumulation, discussing a protected lifetime income is also important. Several factors should be considered when choosing the best product and benefit for a client, with guaranteed income rates being one of them. Below are some of the latest income trends in the Variable Annuity (VA) and Fixed Indexed Annuity (FIA) space.

In the VA space, the current guaranteed highest payout for a 10-year deferral at age 65 is 9.83% (factoring in the roll-up and the income benefit), a full percentage point higher than this time last year when it was at 8.93%. The average VA income is also up to 7.35%, up almost half of a percent from October of 2021, and a full percent from October 2020. These VA numbers also represent non-reducing guaranteed income, meaning the income rate will not decrease if the contract value is reduced to zero.

In the FIA space, guaranteed income is even higher. As of October 2022, the highest guaranteed income for a 10-year deferral at age 65 is at 12.20%, just over 2% higher than in October 2021 when it was at 10.02%. Average income is up to 8.62%, more than a percentage point higher than the 7.45% rate in October 2021.

In Conclusion: This can leave us to wonder if guaranteed income rates will continue to rise or at what point they will level off. It also lets us wonder when we are singing Auld Lang Syne next New Years where income rates will be.


MikeFor more information about the author DDW's products and services, contact Mike Freeman, President of DDW.

973.567.6600 | michael.freeman@duediligenceworks.com

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