Personal Income Annuity review

Yes, for the right buyer. This is a good annuity for someone who wants a guaranteed income stream for life, is comfortable with a variable annuity's market-linked account value, and is already working with a Fidelity advisor. It is less appealing for someone who wants pure growth, doesn't plan to use the income guarantee, or wants a wider investment menu — because in those cases the layered fees are paying for a feature you may not need.

The main reason to buy Personal Income Annuity is the built-in lifetime income guarantee. You're paying for the certainty that, regardless of how the market behaves, you'll be able to take a defined percentage of your Benefit Base every year for the rest of your life — and a joint version covers a spouse too. The secondary reason is the short surrender commitment: at 2% for five years and zero after that, your money isn't locked up for nearly as long as on most income annuities. In practice, this is the type of contract someone buys when they want a personal pension with some growth potential, not a high-octane growth account.

I think this annuity is best for someone in the pre-retirement or early-retirement window, roughly age 55 to 70, who has at least $50,000 to commit, wants a guaranteed income they can switch on at 59½ or later, and is already a Fidelity advisory client. It works for both qualified money (IRA, Roth, SEP, SIMPLE) and non-qualified savings. It is less attractive for someone who mainly wants accumulation, wants to manage a broad menu of investment options, expects to need large lump sums above the free-withdrawal amount, or doesn't have access to a Fidelity advisor — since this contract is only sold through that channel.

You are not really buying a market growth product, even though it's technically a variable annuity. You're buying a guaranteed income framework wrapped around an investment account. The account value itself rises and falls with two Fidelity portfolios, but the part that actually drives your retirement paycheck is the Benefit Base — a separate accounting value used only to calculate income. That Benefit Base grows at a guaranteed 5% simple rate each year for up to ten years before you turn income on, and it locks in higher values if your account value beats it. When you activate income, your age determines the withdrawal percentage. The trade is straightforward: you give up some growth and pay rider and insurance fees, and in return you get a floor under your future income that doesn't depend on the market.

The headline feature is the Nationwide Retirement Income Rider III, which is included automatically. Before you turn income on, the rider grows your Benefit Base in one of two ways, and you get whichever is higher: the greatest anniversary account value plus any new premiums (adjusted for withdrawals), or your premiums increased at the 5% simple roll-up over a ten-year accumulation period. The account can also "step up" the Benefit Base on contract anniversaries if your investments outperform the roll-up.

When you're ready for income — no earlier than age 59½ — the rider pays a percentage of the Benefit Base for life. Those percentages scale with your age at the time you start. Per the brochure, a single owner starting between 59½ and 64 receives 5.60%, rising to 6.45% at 65–69, 7.00% at 70–74, 7.40% at 75–79, and 7.80% at 80 and up. Joint payouts run slightly lower at each band (5.10%, 5.95%, 6.50%, 6.90%, and 7.30%, respectively) because the guarantee has to cover two lives. In plain English: the longer you wait to start, the bigger the percentage — and the income continues even if the underlying account value eventually drops to zero.

The most meaningful secondary feature is the short surrender schedule. Most annuities built around lifetime income ask for seven to ten years of surrender commitment. Here it's five years, and the charge never exceeds 2% — a fraction of the 8% or 9% first-year charges common on competing income products. That matters because it means your principal isn't trapped for long. If your situation changes a few years in, the cost to exit is modest, and after year five there's no surrender charge at all. There's no market value adjustment on this contract either, so the surrender math is predictable rather than tied to interest-rate swings.

This contract is built for income, but the liquidity terms are unusually friendly for the category. You can take 10% of your remaining premium immediately, and the surrender charge is a flat 2% for the first five years before dropping to zero. There's no market value adjustment, so you always know exactly what an early exit costs. The contract also includes nursing-home and terminal-illness surrender-charge waivers, which let you access funds without penalty in qualifying health situations.

The important caution is the rider, not the surrender schedule. The Retirement Income Rider III cannot be terminated at your request once the contract is in force — so even if you decide you don't want the income feature, you'll keep paying the 1.30% rider fee for as long as you hold the contract. And large withdrawals above the free amount, or before you activate income, will reduce the Benefit Base proportionately, which shrinks your future guaranteed income. This is not a contract to treat like a savings account.

The fees here stack, and you should look at them together. First is the 1.30% annual rider fee, charged on the Benefit Base — and because the Benefit Base can grow larger than your account value, this fee can rise even when your investments don't. That's the price of the lifetime income guarantee. Second is the 0.90% mortality and expense (M&E) charge, assessed daily on the account value — this is the standard variable-annuity insurance cost. Third are the underlying fund expenses, which range from 0.28% to 0.66% depending on allocation; the default Fidelity VIP FundsManager 60% portfolio runs 0.66%.

Add those up and a typical buyer is looking at roughly 2.8% to 2.9% in annual costs against the account value and Benefit Base combined. There's no annual contract fee or administration charge, which helps, but the all-in load is meaningful. The honest framing is this: the 1.30% rider fee buys you a guaranteed income floor and a 5% roll-up — whether that's worth it depends entirely on whether you actually intend to turn income on. If you don't, you're paying for a feature you can't cancel.

Legal Entity: Nationwide Life Insurance Company

Parent: Nationwide Financial

AM Best Rating: A+

Nationwide is a large, established mutual insurer, and an A+ rating from AM Best (the second-highest of fifteen grades) reflects strong financial stability — which matters when you're relying on a lifetime income guarantee that may need to pay out for decades.