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Vanguard - annuities through Vanguard - Guaranteed Lifetime Withdrawal Benefit

Get lifetime income with Vanguard investments and an insurance company guarantee

You can use a Vanguard Variable Annuity to get a dependable stream of income in retirement by choosing the Guaranteed Lifetime Withdrawal Benefit (GLWB) rider.*

Using the GLWB for retirement planning

If you withdraw from your retirement assets without a clear plan, you may run out of money, and market volatility can erode your savings. The optional GLWB rider available through the Vanguard Variable Annuity offers a way to help you safely draw down your retirement assets.

You can purchase a GLWB rider with either pre-tax (qualified) or after-tax (nonqualified) assets. One strategy could be to roll over your qualified assets—an IRA or 401(k)—into a Vanguard Variable Annuity with a GLWB rider. You'll be assured that you can make withdrawals year after year for as long as you live—even if your original investment is depleted.

Benefits of a GLWB

The GLWB rider combines the growth opportunity of the Vanguard Variable Annuity with a guarantee that your withdrawals will never drop below a certain level.

With the GLWB rider, you have greater flexibility and control of your investment. You can:

  • Receive guaranteed payments for life.
  • Be protected against investment losses due to market fluctuations.
  • Make additional withdrawals whenever you like (up to your maximum annual withdrawal amount) without affecting the Total Withdrawal Base.
  • Start, stop, or skip withdrawals at any time.

Unlike with immediate annuities (also known as income annuities), you don't have to permanently surrender your investment amount to an insurance company in exchange for a stream of payments.

How the GLWB works

Optional rider

You can add the GLWB rider to a Vanguard Variable Annuity for an extra cost at any time prior to age 90.

Low-cost Vanguard investments

You can select from three designated investment portfolios based on low-cost Vanguard mutual funds:**

  • Balanced Portfolio (60%–70% stocks/30%–40% bonds).
  • Moderate Allocation Portfolio (60% stocks/40% bonds).
  • Conservative Allocation Portfolio (40% stocks/60% bonds).

When you consider the 1.20% GLWB annual fee, we believe you'll find the cost of the guarantee to be very competitive in the marketplace.†

Insurance protections

The Vanguard Variable Annuity with the optional GLWB rider is issued by Monumental Life Insurance Company and, in New York State only, by Transamerica Financial Life Insurance Company. Both companies have high ratings for financial strength from leading independent rating agencies and stand behind the guarantee of payments for life. Product guarantees are backed by the claims-paying ability of the issuing insurance company.*

Making withdrawals

You can start taking withdrawals following the rider anniversary after you turn age 59 (if you're the annuitant named in the contract). Your total withdrawal base (TWB) and your age when you start taking withdrawals will determine the amount you can withdraw each year. The TWB on your rider date is equal to the accumulated value in your designated investments.††

An example of how you can withdraw from a GLWB

Assume you're the annuitant of a variable annuity with an accumulated value of $150,000, you elect the single life GLWB rider, and start withdrawals at a 5% withdrawal rate when you're 65. You're assured of withdrawing at least $7,500 a year for life (if you don’t take excess withdrawals)—even if the total value of your investments falls because of market performance. And if your investments grow, your benefit can increase.

This example assumes that you don't take excess withdrawals from your designated investments during the year. The GLWB can be of great value to investors looking for guaranteed income, but it's important to know that excess withdrawals beyond the maximum annual withdrawal amount will reduce or eliminate the income and the guarantee provided by the GLWB.

Guaranteed Lifetime Withdrawal Benefit brochure »

The following table summarizes the allowable withdrawal percentages based on the age of the annuitant for the single and joint options.

Annual withdrawal percentages

Age at first withdrawal

Maximum annual
withdrawal percentage
with single life rider

Maximum annual
withdrawal percentage
with joint life rider

59–64 4.00% 3.50%
65–69 5.00% 4.50%
70–79 5.00% 4.50%
80+ 6.00% 5.50%

If you chose a joint life rider, the withdrawal percentages are based on the younger age of the annuitant or the annuitant's spouse when withdrawals begin.

* Ratings of the insurance company don't apply to the Vanguard portfolios and don't provide protection against investment risk.


** Source: Lipper Inc. Vanguard average expense ratio: 0.19%; mutual fund industry average expense ratio: 1.11%, as of December 31, 2012; excludes fees for optional riders.

† As of May 2013, the current annualized fee for the GLWB rider is 1.20% of the Total Withdrawal Base. The rider fee for future premium payments into the designated GLWB investments could be higher or lower, but not more than the maximum of 2.0%.

†† Any withdrawal before age 59½ could be subject to a 10% federal penalty tax. Excess withdrawals beyond the maximum annual withdrawal amount may reduce or eliminate the income and the guarantee provided by the GLWB.

Variable annuities are long-term investment vehicles designed for retirement purposes. They contain underlying investment portfolios that are subject to investment risk, including possible loss of principal.

The Vanguard Variable Annuity is a flexible-premium variable annuity issued by Monumental Life Insurance Company, Cedar Rapids, Iowa (NAIC No. 66281), and in New York State only, by Transamerica Financial Life Insurance Company, Harrison, New York (NAIC No. 70688). Form No. VVAP U 1101 (in Florida, Form No. VVAP U 1101 (FL), and in New York, VVA NY 0208(R13)). GLWB Rider Form No. RGMB 43 0811 (in Florida, RGMB 43 0811 (SI)(FL), RGMB 43 0811 (JT)(FL), and in New York, RGMB 43 0811 (SI)(NY)(REV), RGMB 43 0811 (JT)(NY)(REV)). Return of Premium Death Benefit Rider Form No. VVA RP 0811 (in Florida, VVA RP 0811 (FL), and in New York, VVA RP 0811 (NY)(REV)) without agent representation. Policy and rider form numbers may vary by state and may not be available in all states. The Vanguard Group administers the Vanguard Variable Annuity for the issuer. Its variable annuity and investment costs rank among the lowest in the industry, according to Morningstar, Inc., December 2012. The Vanguard Group, Monumental Life Insurance Company, and Transamerica Financial Life Insurance Company do not provide tax advice. Investors are encouraged to consult a tax advisor for information on how annuity taxation applies to their individual situations.

All references to spouse may include civil union partners, registered domestic partners, or other similar relationships as recognized by your state. Please contact a qualified tax advisor prior to purchasing to discuss how these relationships will be recognized for tax purposes.

This webpage is not approved for advertising in Oregon, and may not be approved for Georgia, Mississippi, or Oklahoma.

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