The Guaranteed Minimum Withdrawal Benefit with Ratchet (GMWB+R) is the most popular Variable Annuity guarantee type sold today. It combines three powerful features:
Starting investment: $100,000 at age 60 Rollup rate: 5% per year Ratchet: Annual step-up Withdrawal rate: 5% of benefit base at age 65
| Year | Age | Account Value | Rollup Base | Ratchet Base | Benefit Base |
|---|---|---|---|---|---|
| 0 | 60 | $100,000 | $100,000 | $100,000 | $100,000 |
| 1 | 61 | $108,000 | $105,000 | $108,000 | $108,000 |
| 2 | 62 | $95,000 | $110,250 | $108,000 | $110,250 |
| 3 | 63 | $102,000 | $115,763 | $110,250 | $115,763 |
| 4 | 64 | $125,000 | $121,551 | $125,000 | $125,000 |
| 5 | 65 | $118,000 | $131,250 | $125,000 | $131,250 |
At age 65, the guaranteed annual withdrawal is $6,563 (5% of $131,250) — regardless of actual account value.
The GMWB+R essentially creates a pension-like income floor from a market-linked investment. In the best case, strong markets ratchet your benefit base higher. In the worst case, the rollup guarantees growth even in a prolonged bear market.
GMWB+R riders typically cost 0.80% - 1.25% annually. This is charged against your account value, which means the actual cost in dollars decreases if markets fall (since the percentage is applied to a smaller balance).
Our calculator lets you select GMWB+Ratchet and adjust the rollup rate, ratchet frequency, and withdrawal age. Try a “Crash & Recovery” scenario to see the rollup in action, or a “Bull Market” to see the ratchet lock in gains.