Retirement income planning using QLAC for age 85

Major concern for retirees is the running out of money during retirement. You have accumulated a portfolio for the last three decades while working now you have to make that money last with pulling income for the next 25 years or is it 30 years or 35 years?

Here lies the problem. How many years will I live so I can figure out how much to pull from my portfolio every year without running out of money. Yet without knowing the time period, it’s impossible to know if you should be spending more or less and if the investments in the portfolio can be more conservatively invested or be somewhat more aggressive in your stock allocations.


QLAC, also known as a longevity annuity, provides guaranteed lifetime income later in life. The income start age is chosen by the owner at deposit which must begin by age 85.

The benefit of using QLAC in your income planning is to solve for the unknown time period problem. As an example a 65-year-old couple that purchases a QLAC with income starting at age 85 will cover all of their inflated income needs after age 85. Now the couple’s retirement income question just got simpler. They will now only need to solve for the income for the next twenty years (age 85), which is defined, as the QLAC will provide inflation adjusted income for life after age 85.


The 65-year-old couple has $1,000,000 and wants to spend $40,000 per year from their retirement portfolio for the rest of their lives and increase annual payment 3% per year for purchasing power in the future. $40,000 per year increase for inflation every year will be $72,244.45 per year at age 85 or in 20 years. Today the couple can purchase a QLAC also called a Longevity annuity for their future $72,244 per year, or $6,020 per month, beginning at age 85 for a one time deposit today of $260,000. The QLAC or Longevity annuity purchase will leave the remaining $740,000 of the retirement portfolio available to cover the next 20 years from age 65 to 85. Since QLAC has a limit of $125,000 deposit the amount can be split among both of their IRAs and or non-qualified longevity annuity. All have the same deposit and income payout terms.

The couples “problem” just got a whole lot easier to figure out now, instead of trying to invest $1,000,000 for a $40,000 per year inflation-adjusted retirement income for an unknown time period. The couple can invest $740,000 for a $40,000 per year inflation-adjusted income for exactly 20 years, secure in knowing that all payments beyond that point will be covered by the QLACs and backed by the longevity insurance company guaranteed lifetime income payments. The QLACs will also allow the couple to take more risk in their portfolio knowing the guaranteed lifetime income payments are not to far off to cover the unknown retirement income time horizon.

For a no annual fee QLAC and no free quote see where we compare all QLAC approved companies to find you the best income amount. 

QLAC Buying Tips

Comparing longevity annuity rates or QLAC income rates should be an easy task to complete. Following the tips in this article to navigate you thru the QLAC process with maximize your purchasing power.

Tip #1  Your Advisor doesn’t want you to buy a QLAC

Call your financial advisor and tell her to get you the top three companies paying the highest income amount given your initial deposit amount.  Problem is does your financial advisor want to transfer your manageable billable assets out to another company even If it is in your best interest?  Second the commission is very low and usually one time.  This is a loss for your financial advisor at your increased retirement income gain from the purchase of a QLAC.  These  factors are a common behind the scenes issue that your advisor might have.


Tip #2  Research the companies online

There are less than 10 longevity annuity or QLAC companies offering consumer annuities.  It should be easy to get access to longevity annuity consumer brochures and information for each company.


Tip # 3  Read the fine print for limitations

Investment minimums are as low as $5,000 and not the stated $25,000 initial     investment usually told to you by financial advisors.  This difference in minimums is “justification”  from the low commission and sometimes heavy paperwork an advisor must complete in order to establish a QLAC  or longevity annuity. Remember $125,000 is the maximum the Treasury Department will allow into a QLAC or Qualifying Longevity Annuity Contract from their summer 2014 rule.


Tip # 4 Flexible deposits or stacking is available.

Once your initial deposit is made most longevity annuities allow for monthly deposits as low a $100 per month.  Each additional deposit “stacks” income on top of your initial quoted monthly income rate.  As the example below shows an initial deposit of $125,000 at age 75 with annual deposit of $9,000 per year until year 7 gives him a total income of $4,182.18 per month.

Stacking QLAC deposits

Look closely in the second year he deposited $9,000 which gave him an additional $209.90 in monthly income at age 85, which was his initial income start date chosen at application.  Each year his deposits stack on each other to give him a higher income amount.  Did you notice that each year he makes the same deposit amount, $9,000 in this example, but his monthly income each year is lower. This is because his deferral period is lower each year and his longevity credits are smaller each year for a lower income “stack” each year.QLAC is a longevity annuity also know as a Qualifying Longevity Annuity Contract.  Usually a one time deposit for a guarantee lifetime income at a future date chosen by the applicant. Options include inflation income adjustments, death benefits of deposit and joint annuitant for income.

QLAC income produce what is know in the retirement planning world as retirement alpha.  Alpha is defined as having the most power in a group, dominate compared to others. For a no annual fee QLAC and free quote see where we compare all QLAC approved companies to find you the highest income amount. Retirement Happiness 🙂

Annuity Income at age 80: Index vs QLAC


What is the better guaranteed income product for a retiree age 70 wanting guaranteed lifetime income at age 80; Index annuity or QLAC? 

Most popular choice has been the index annuity with almost $50 billion of deposits in 2015.  Allianz Life is the #1 carrier in indexed annuities, with a market share around 25 percent. American Equity Companies held on as the #2 carrier in the market; Security Benefit Life, Great American Insurance Group, and Athene USA followed-up in sales, rounding-out the top five. Allianz Life’s Allianz 222 Annuity was the #1 selling indexed annuity for the second consecutive quarter in 2015.  These index annuities have an optional GLWB (Guarantee Lifetime Withdrawal Benefit) income rider usually for up to 10 years where income is guaranteed for an annually fee above 1%. Fewer and fewer index annuities have income riders that guarantee an income payment for life as the current low interest rate environment is to blame.

The product that got the “blessing” from the Treasury Department in 2014 is the longevity annuity also know as a QLAC (Qualifying Longevity Annuity Contract).  This federally approved “blessing” allowed the RMD from IRA deposits to defer required minimum distributions until age 85.  Usually a one-time deposit for a guarantee lifetime income at a future date chosen by the policy holder. QLAC options include inflation income adjustments of 1% -4% along with CPI-U, death benefits of deposit and joint annuitant for income.


  1. Index Annuity with Income Rider (6.25% ”roll up rate” annually for 10 year, 6.8% withdrawal rate at age 80)  10 years at age 80  lifetime income is $12,842 annually

  2. QLAC or Longevity annuity 10 years at age 80  lifetime income is $15,950 annually

Read More…

New York Life QLAC Review

When shopping for a QLAC, there are options to be aware of. These include the company and legal limit that is calculated to purchase a QLAC. But they should also include a review of the annuity carrier through which you are purchasing your Qualifying Longevity Annuity Contract or QLAC. This is because you will want the carrier to be strong and stable from a financial standpoint – and to know that the insurance carrier will  continue to pay your income payments on a regular basis.

New York Life’s Company History

The company was founded in 1845 in New York City at 58 Wall Street.  New York Life Insurance Company is the largest mutual life insurance company in the United States. A Mutual Life Insurance company is owned entirely by its life and annuity policyholders.  Profits are redistributed back to policyholders in the form of dividends.

The main products that are offered by New York Life Insurance Company are life insurance and retirement annuities. The products are offered through licensed “in-house” captive financial advisors throughout the United States, as well as through a limited number of New York Life Insurance Company’s brokerage distribution partners.

New York Life Insurance Company’s Ratings

New York Life Insurance Company has been in the insurance industry for many years, the ratings that the company currently holds are outstanding related to their financial strength and stability. QLAC is usually issued by New York Life’s division called New York Life Insurance & Annuity Company out of Delaware. See the following ratings:

  • A++ (Superior) from A.M. Best.
  • AA+ from Standard & Poor’s.
  • 100 (out of 100) Comdex Rating

New York Life QLAC offering details.

New York Life’s QLAC is called Guaranteed Future Income Annuity II which is a flexible premium deferred income annuity that provides a stream of income payments guaranteed for the life, or lives, of the annuitant(s), beginning on a date chosen by the policy owner.

  • Issue Age:   QLAC is 31yrs old to 80 yrs old
  • Income start date:  Selected at time of purchase. Flexible income start date feature  allows the owner to after the latest premium payment or defer income payments up to five additional years from the original income start date selected.
  • Income Modes:  Annually, Semi-annually, Quarterly, or Monthly
  • Payment Options: Life with Cash Refund.  This option guarantees that, if the annuitant (or both annuitants for a Joint Life policy) dies before the income payments received equal the premium paid, the beneficiary(ies) will receive a lump sum equaling the premium less all income payments received.
  • Life Only.  This option does NOT guarantee a return of deposit at death.  Income continues for the life of the annuitant, usually at a higher initial income rate than other income options.
  • Optional Features:   Annual income increases, COLA. Allows most policy owners to increase income payments each year by 1% to 3%, depending on the percentage chosen at time of deposit.

NYLife + or - 5 years income

QLAC Income rates comprised

QLAC Defined

The IRS and Treasury Department have released final regulations on the treatment of Qualifying Longevity Annuity Contracts, or QLACs, under the required minimum distribution (RMD) rules of Internal Revenue Code section 401(a)(9). The final regulations provide an exception to the RMD rules, allowing IRA owners to use a portion of his or her account to purchase a deferred income annuity (DIA), in which annuity payments commence at a specified age, no later than 85, while still satisfying the RMD requirements. Deposits are limited to the lesser of $125,000 or 25% of the owner’s IRA values as of 12/31 of the previous year. The value of the QLAC will be excluded from RMD calculations. The dollar threshold may be increased in future years to reflect changes in the cost of living in $10,000 blocks. Income payment types can be Single Life or Joint Life ( Same Sex Partner or Spouse), and Life with Cash Refund of Deposit.  No cash value beyond the initial deposit may present at the time of death of annuitant.

How to use this annuity in retirement planning?

Have your constant lifetime income cover your basic expenses in retirement.  This would include any Social Security, Pensions, and annuity income like New York Life’s QLAC called Guarantee Future Income Annuity series.  Think of a QLAC as a base line for retirement income along with your social security payments.  Having this guaranteed income will allow your other investments to potentially take more risk in turn gaining more return for you.

Studies have shown that converting a small portion, less than 50%, of your retirement funds to an income annuity will increase your retirement portfolio income success rate over a 20-year plus time frame.  By eliminating some of your stock market risk with a purchase of Guaranteed Future Income Annuity will produce lifetime income in retirement that cannot be outlived.

Longevity Credits time to act now

Today’s rates could be the highest rates you see for a very long time if you’re thinking of buying an
Boomers are learning about the importance of securing guaranteed lifetime income and they are reaping
the benefits of a secure retirement. As more and more boomers approach retirement age and obtain
annuities to cover their basic expenses, this demand, coupled with increasing life expectancies can have
a dramatic effect on payout rates for future purchasers. Let me explain…
Last October, the Society of Actuaries (SOA) Retirement Plans Experience Committee (RPEC) released
the final report of the RP-2014 mortality tables. The updated tables display a consistent trend of increased
life expectancy. Dale Hall, managing director of research for the SOA stated that, “The purpose of the new
reports is to provide reliable data that actuaries can use to assist plan sponsors and policy makers in
assessing the financial implications of longer lives.”
Let’s start by taking a look at the chart below, which highlights the differences between the 2000 Mortality
Tables vs. the 2014 Mortality Tables:

We see a 2.4 percent increase in life expectancy with 65 year old males and a 2.8 percent increase in life
expectancy with 65 year old females. If we were to continue on this trend, in 2028 we would anticipate to
see life expectancy rise to 88.6 years (for males 65 years old) and 91.2 years (for females 65 years old).
With increased improvements to medical technology, I predict that we will see significant additional growth
in life expectancy and should expect it to rise even greater than the trends indicate.
The updated mortality tables will require insurance companies to lower their payout rates in order to
properly reflect longer life spans. Boomers are in for a quite a shock when they see these adjustments coming. I’m talking about payout rates going from 14 percent to 10 percent, from 9 percent to
7 percent, and from 7 percent to 5 percent. These will not be small adjustments.
People are always asking me why they should buy an annuity in today’s low interest rate environment. I
say that today’s rates are not low. These are the new rates. Today’s rates could be the highest rates you
see for a very long time. Income annuities are really not an interest rate play. They are a longevity credit
When it comes to lifetime income annuities, most people don’t realize how these products are able to
offer such high cash flows and payout rates. These humble annuities offers something that no other
product can offer: longevity credits, otherwise known as mortality credits. This is what separates income
annuities from other investment options.
Cash flow from an income annuity hails from three different sources: interest, a return of principal, and
mortality credits. Traditional investments can typically manufacture two of these components — interest
and return of principal. More importantly, only life insurance companies can manufacture mortality credits.
When payout rates for income annuities are released with the new mortality tables, you will see the
payout rates drop because of an adjustment in longevity credits. Combining the fear of outliving your
money and the uncertainty of the market, you and your clients need to lock in these guaranteed rates
now. These are likely the highest longevity credits you will see for the rest of your life.

Hurry, while supplies last

If the SOA only releases their mortality tables every 14 years, then you might be thinking, “I have a 14-
year window before rates re-balance, right?” Wrong. Many of these mortality adjustments will occur in the
coming months.
Here is another interesting fact: the life insurance industry has only a limited amount of longevity credits.
See, it is the life insurance on the books that provides the built-in hedge to lifetime income annuity sales.
As longevity increases and more people start “fishing” for longevity credits offered by income annuities,
the “longevity credit pool” begins to drain. This will also affect pricing of annuity products in the future.
Consistently educating yourself on the importance of covering 100 percent of your “minimum acceptable
level of retirement income” with guaranteed lifetime income is a must. This approach provides the most
cost-effective and practical way to provide for security in retirement, a matter that should be a top priority
for every boomer.
After covering basic expenses, you will need to put a significant amount of the remaining portfolio into
annuities and invest some into stocks, bonds, and money market funds. By securing annuities earlier in
retirement planning, you can lock in these longevity credits and optimize your retirement portfolio right off
the bat. Just like a day spent fishing, would you much rather cast off into a fully stocked pond as opposed
to a pond with a limited supply of fish?

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