Minneapolis-based RiverSource Life Insurance Company can trace its history all the way back to 1894, when it began offering investment and insurance services to Americans with less money to invest. The company offers life insurance, long-term care insurance and disability income insurance, as well as a plethora of annuities, including variable annuities, fixed indexed annuities, fixed annuities and immediate annuities.
If you have questions about what type of annuity is best for your personal financial situation, try speaking with a financial advisor who specializes in retirement planning.
| Annuity | Fees | Annuity Type | Minimum Initial Premium | More Information |
|---|---|---|---|---|
| RAVA 5 Advantage® Find an Advisor |
| Variable annuity | $2,000 | Annuity TypeVariable annuityMinimum Initial Premium$2,000 |
| RiverSource Protected Advantage Find an Advisor |
| Fixed annuity | $2,000 | Annuity TypeFixed annuityMinimum Initial Premium$2,000 |
| RAVA 5 Choice Find an Advisor |
| Variable annuity | $2,000 | Annuity TypeVariable annuityMinimum Initial Premium$2,000 |
Insurance and annuity companies are often reviewed by ratings companies to determine their overall financial strength. RiverSource has received high marks. Moody’s rates RiverSource an Aa3 (fourth-highest of 21), A.M. Best rates it an A+ (second-highest of 15) and Standard & Poor’s (S&P) rates it an AA- (fourth-highest of 21). All three ratings companies give RiverSource a stable financial outlook.
RAVA 5 Advantage®
In order to open a RAVA 5 Advantage® variable annuity, you must be 90 years old or younger and have $2,000 in investable assets. When you’re ready to begin investing through your annuity, you’ll have plenty of model portfolios and funds to choose from. There are options from Fidelity, Morgan Stanley, Wells Fargo and more with investments that focus on stocks of varying market capitalizations, real estate, alternative investments and fixed-income.
Perhaps the best part of this and other RiverSource annuities are the plethora of benefit riders that are available for you to add on to your contract. These include single and joint life benefits, as well as enhanced death benefits so you can leave more for your beneficiaries. In total, there are eight life riders and four death riders available.
Fees
The most basic charge associated with this annuity is its $50 annual contract fee. However, if your account balance goes above $50,000, this fee is waived.
If you choose the seven-year term, you’ll pay a 1.10% mortality and expense risk fee. Those who select the ten-year term will pay a reduced rate of 0.95%.
If you have to make a withdrawal earlier than expected, RiverSource allows you to take out your annual cumulative earnings or 10% of your prior anniversary contract value. Anything above those limits will force you to pay the following withdrawal fees, depending on whether you choose the seven- or ten-year term:
| Withdrawal Fee Schedule | |||||||||||
| Term Length | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11+ |
| 7 Years | 7% | 7% | 6% | 5% | 4% | 2% | 0% | ||||
| 10 Years | 8% | 8% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
Fees for the aforementioned benefit riders range from 0.25% to 1.70%, depending on your status (single or joint).
In the event that you withdraw from your contract before age 59.5, the IRS will charge you a 10% income surtax on top of your standard income taxes.
Realistic Return Expectations
Variable annuities’ investments are customized by their owners, so returns vary on a case-by-case basis. Over a five-year period, RiverSource’s data shows its available funds have garnered returns ranging from less than -1% up to more than 25%.
RiverSource Protected Advantage
There are three incarnations of the RiverSource Protected Advantage annuity: six-year, eight-year and ten-year. They each come with a five-year interest rate guarantee period, but the length of your withdrawal schedule will change according to what you pick.
In general, the longer the term you go with, the stronger your interest rate from RiverSource will be. Once your term is up, your contract will have its rate renewed on an annual basis.
The minimum initial premium for this contract is $2,000, and you must be 79 years old or younger to become an annuitant.
Fees
As is common with fixed annuities, there are no annual fees to worry about with the RiverSource Protected Advantage contract. RiverSource does charge withdrawal fees if you withdraw more than 10% of your contract value too early, though. Charges vary depending on the length of your rate guarantee period.
| Withdrawal Fee Schedule | |||||||||||
| Term Length | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11+ |
| 6 Years | 9% | 8% | 7% | 6% | 5% | 4% | 0% | ||||
| 8 Years | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 0% | ||
| 10 Years | 10% | 9% | 8% | 7% | 6% | 5% | 4% | 3% | 2% | 1% | 0% |
Withdrawals made prior to age 59.5 are often accompanied by a 10% income tax penalty, courtesy of the IRS. This does not account for standard income taxes.
Realistic Return Expectations
The rates you’ll receive with the RiverSource Protected Advantage annuity are dependent on both the size of your investment and the term you go with. Generally speaking, the longer the term you select, the higher your rate will be.
RAVA 5 Choice
The RAVA 5 Choice annuity, another one of RiverSource’s variable contracts, again calls for just a $2,000 initial premium with a maximum issue age of 90 years old. However, whereas the RAVA 5 Advantage contract lets you pick between either a seven- or ten-year withdrawal schedule, this annuity only has a seven-year structure.
This annuity is an investor’s dream, as there are well over 90 different investment opportunities that RiverSource makes available. Either you can invest in one of many asset allocation portfolios or you can pick the individual funds you want included in your portfolio. Like the RAVA 5 Advantage contract, these investments are centered around securities including:
- Short-, long- and intermediate-term fixed-income
- Small-, mid- and large-cap stocks
- International stocks
- Sector-specific
- Alternative investments
- Real estate
There are benefit riders available for this annuity, with multiple life and death benefit riders to pick from. This makes it one of the more customizable variable contracts on the market.
Fees
The most basic charge annuitants need to pay is a $50 annual contract fee, though accounts worth more than $50,000 can avoid this. There’s also a 1.20% mortality and expense risk fee during your first 10 years with this contract, though this rate drops to 0.95% beginning in year 11.
| Withdrawal Fee Schedule | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8+ |
| 7% | 7% | 7% | 6% | 5% | 4% | 2% | 0% |
Depending on how much you want to customize your annuity, benefit rider fees will run you anywhere 0.25% to 1.80% annually.
Anyone who’s younger than 59.5 that withdraws from their contract will be subject to a 10% income tax penalty. You’ll have to pay according to your normal income tax rate as well.
Realistic Return Expectations
As with any variable annuity, their returns are largely unpredictable. This is because everything relies on how the funds you invest in perform over the annuity’s term. As of Feb. 2021, the funds available through RiverSource have seen annual returns ranging from about -1% to 20%.
Retirement Planning Tips
- Planning your retirement benefits and income on your own is a daunting venture. Luckily, finding a financial advisor that can help doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- There are many factors to account for when formulating your retirement plans, with Social Security being one of them. If you’re unsure of what you’re in line to receive from Uncle Sam, check out our Social Security calculator.
All information is accurate as of the writing of this article.
