What is an income rider in an annuity designed to do?

An income rider in an annuity is specifically designed to provide guaranteed income during retirement. This feature allows annuity holders to receive a predetermined amount of income for a specified period, which can help to ensure financial stability when entering retirement.

The income rider typically guarantees a minimum income stream, regardless of the performance of the underlying investments within the annuity. This can be particularly beneficial for retirees who want assurance that they will have funds to cover their living expenses, as it helps mitigate the risks associated with market volatility and longevity.

In contrast, options that suggest unlimited withdrawals, unexpected increases in principal, or providing cash value within the first year do not align with the primary purpose of an income rider. Such riders focus on securing a reliable income rather than offering flexibility in withdrawals or immediate cash value benefits.