What is a financial product that gives the plan holder the right to withdraw a fixed percentage of the plan until the principal is depleted?

A Guaranteed Minimum Withdrawal Plan (GMWP) is designed specifically for individuals who want the security of knowing they can withdraw a set percentage of their investment each year until the principal amount is exhausted. This financial product integrates investment elements with withdrawal guarantees, which means that even during market downturns, the plan holder can still access a predetermined amount of their investment annually.

This structure is particularly attractive for retirees or those seeking steady income from their investments, as it offers both the potential for growth and the assurance of regular withdrawals, regardless of the performance of the underlying investments. Such a product often combines features of an annuity and an investment fund.

In contrast, the other options do not specifically provide the feature of guaranteed withdrawals calculated as a fixed percentage. A fixed income plan typically focuses on investments that generate stable income, but it does not guarantee withdrawals relative to the principal. A segregated fund is an insurance product that invests in mutual fund-like investments but also does not specifically guarantee fixed withdrawals, rather focusing more on protecting the capital and potential for growth. Mutual funds provide investment returns based on market performance and do not inherently offer withdrawal guarantees or a fixed percentage withdrawal feature.