Specializing in retirement planning and personalized investment management.

Income Guarantee without Buying a Variable Annuity

Income Guaranteed

Aria Retirement Solutions, backed by Transamerica, offers a lifetime income guarantee on an investment portfolio of mutual funds and exchange traded funds (ETFs).  It works similar to an income guarantee on a variable annuity in that income is based on your age and a locked-in high water mark of your account value.  This income is guaranteed to be paid to you no matter what the market does in the future.  It can help overcome the risk of large losses right around retirement (sequence risk) and outliving your money (longevity risk).

How it works

The market value of your initial contribution is covered from day 1.  This is referred to as your “coverage base” at Aria and it’s used to calculate the guarantee withdrawal amount.  Over time, your account will rise and fall based on the market.  If your account goes up, your coverage base is automatically stepped-up to the highest quarterly value within the last year.  The new coverage base is then used to recalculate your new guaranteed income figure.  If the account goes down, you still receive the coverage base of the higher amount.  This essentially will allow you to draw retirement income based off your highest quarterly account value. 

This process continues until you decide to start taking withdrawals from your account which is referred to as “locking in”. Once locked in, you’ll take guaranteed income withdrawals based on your account value or coverage base, whichever is higher.  This means that you’re guaranteed to receive income based on your highest quarter prior to locking in.  If your account continues to grow afterward, or the yield on the 10-year Treasury Bond goes up, you could still receive step-ups in your guaranteed income.  If your account value gets depleted, the guarantee benefit kicks in, and you still receive your guaranteed income for the rest of your life.  The guarantee is backed by the claims-paying ability of Transamerica Advisors Life Insurance Company.

Income calculation

Your annual guaranteed withdrawal amount is based on your coverage amount multiplied by a “cover percentage” of 4-8% depending on your age and the closing yield of the 10-year U.S. Treasury Bond on your lock-in date.  $250,000 coverage base x 4.0% coverage percentage = $10,000 of guaranteed annual income for a 65-year old.

Age at Lock-In

Coverage Percentage


4.0 - 5.5%


4.0 – 6.0%


4.5% - 6.5%


5.0% - 7.0%


5.5% - 7.5%


6.0% - 8.0%

*Joint Life Option percentage is 0.5% less and the Coverage Percentage is based on the younger age.

The lowest rates are in effect until the 10-Year US Treasury Bond yield is 4.5% or above. As of early 2016, the yield was around 1.75%.


The cost ranges from 0.80% to 2.2% of the value/benefit of the covered portfolio. There are many eligible funds (DFA, Vanguard, iShares, etc.) across a wide range of asset classes to choose from.  Each fund is assigned a “fund factor”.  The weighted average of a portfolio’s overall fund factor dictates the price of the guarantee.  Portfolios with more stock and that are more aggressive will cost more to insure.

Keep in mind that the cost of the guarantee is in addition to your advisory fee and the cost of the underlying funds.  However, there are no surrender charges.  You can stop the guarantee protection at any time and walk away with your account value.

Other considerations

  • This product is only available on accounts managed with an advisor.
  • The minimum investment is $50,000.
  • You don’t need to cover all your assets, you can choose which accounts to protect.  Your portfolio will be built from an approved list of mutual funds and ETFs and there has to be a minimum of 20% in bond funds.
  • Excessive withdrawals will lower your coverage base and/or lifetime income.
  • Using the product on a non-qualified / taxable account does not impact the taxation of distributions from that account.  If the account is depleted, the benefit payments from the insurance company would be subject to ordinary income taxes.