GMWB – Guaranteed Minimum Withdrawal Benefit – Ottawa, Ontario
GMWB is an option that can purchase for retirement annuities providing protection from risk caused by market downturn. GMWB option allows withdrawal of a fixed portion of their investment each year, regardless of market performance. These payments are guaranteed until the total amount has been recovered.
For example, Sally invests $100,000. Due to a decline in market performance, her annuities are now worth only $80,000. However, since Sally purchased a GMWB that provides 5% annually, she is guaranteed to receive $5000 ($100,000 x 5%) annually until the $100,000 has been fully recovered.