Should You Buy a QLAC?

Published September 13, 2017
A QLAC offers you a guaranteed income stream to give you peace of mind during retirement. We’ve created this quick checklist so you can know if a longevity annuity is a good fit for you.
  • Use our helpful checklist below to know if you should buy a QLAC
  • A QLAC is good fit for you if you’re looking to have income start from your qualified funds after age 70 1/2
  • You should have $250,000 of savings accumulated before purchasing a longevity annuity
  • Consider a QLAC if you’re also looking to reduce your required minimum distributions (RMDs)

The QLAC is like a pension you can buy for yourself from an insurance company using your pre-tax retirement savings, generating a guaranteed income that lasts as long as you do. Because of its special designation, income from QLACs can start later than 70 1/2, allow you to defer your required minimum distributions (RMDs) and associated taxes. It’s a great way to diversify your portfolio, and make sure that all, or most, of your basic retirement expenses will be covered for as long as you live.

But, Blueprint Income chooses to act as a fiduciary and we’ll never suggest you buy a product that isn’t right for you. After years of working with clients, we’ve built an easy checklist so you can know if a QLAC is a good fit for you:

  • Social Security and/or pension benefits won’t cover your regular expenses
  • You haven’t retired yet or are early in retirement
  • You have accumulated between $250,000 and $5 million in retirement savings
  • You have average or above-average health
  • You’re seeking greater certainty in retirement and more of an insurance product
  • You don’t need the money immediately
  • You’d like to reduce your required minimum distributions and defer associate taxes

Sometimes it’s easier to see what you are instead of what you aren’t. If you can check off these boxes, a QLAC is probably not a good fit for you:

  • Social Security and/or pension benefits will cover your regular expenses in retirement
  • You’re younger than 45 or over 75 years old
  • You have less than $250,000 or more than $5 million in retirement savings
  • You have below-average health
  • You’re seeking market exposure for growth, and more of an investment product
  • You need access to the money immediately (check out immediate annuities)

This checklist is a good outline, but we know that it’s sometimes easier to sort through the specifics of your financial future with someone over email or phone. We’re always here to help! You can contact us at [email protected].

How Can I Buy a QLAC?

At Blueprint Income, we offer annuities from more than 15 top rated insurance companies. Click below to get real-time personalized quotes.

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From there, you’ll get access to our annuity guides and team of specialists to help you analyze your retirement finances and walk you through the application process. Need more help to know whether you should buy a QLAC? Email us at [email protected].

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Nimish Shukla

Nimish Shukla

Financial Planning Professional

Nimish has spoken with thousands of customers about retirement spending. As a CFA Charterholder and licensed fixed annuity producer he values the importance of building an income stream for retirement. In addition to his work at Blueprint Income he is also a regular contributor to Nerdwallet.