Account Value Vs. Income Value: What’s The Difference?

One of the most common points of confusion in retirement planning comes down to two terms that sound very similar but mean very different things: account value and income value.

Your account value is typically the money you can actually access, subject to the rules and provisions of your contract. This is the value most people think of as their available balance.

Your income value, sometimes called an income base, serves a different purpose. It is a calculation used to determine how much guaranteed lifetime income you may receive in the future. It is not your cash value, and it is not money that can typically be withdrawn.

This is where confusion often happens. People see their income value growing over time and naturally assume that's the amount they have access to. While that number may increase, its purpose is to calculate future income benefits, not available cash.

Once you understand the difference, evaluating your retirement strategy becomes much easier. Instead of focusing on a single number, it's important to consider the income you'll receive, the liquidity provisions of your contract, the financial strength of the insurance carrier, and any fees that may apply.

Understanding what these numbers actually mean is the first step toward making more informed retirement planning decisions.

If you'd like a second opinion on your current retirement or wealth management portfolio, Torres Wealth Advisors is here to help. Call us at (413) 348-6287 or visit www.torreswealthadvisors.com to schedule a conversation.