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From Grant Wasylik, chief analyst, The Palm Beach Letter: Over the last 15 years, male life expectancy has increased 24 months. Females live 29 months longer than before.
The average 65-year-old male now has a life expectancy of 21.6 years (to age 86.6). For women, it’s an extra 23.8 years (to age 88.8). That’s according to the Society of Actuaries’ mortality tables.
“Longevity” will continue to be a bigger factor in the future of retirement planning.
Ric Edelman—best-selling author and head of Edelman Financial’s $15 billion financial planning firm—says the old retirement model is vanishing:
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In the 1940s and 1950s, workers retired at 62 and received a gold watch, a pension, and a Social Security check. The income was enough to support a couple through retirement. That retirement model is fading fast. Soon, it will disappear completely in the 21st century. |
Enter a Qualified Longevity Annuity Contract (QLAC). It’s an alternate annuity product with PBL’s stamp of approval. And it may be the missing piece of your longevity puzzle…
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Unlike a Single Premium Immediate Annuity (SPIA)—where your income begins right away—a QLAC is a deferred-income annuity. That means you choose the age when you want the income stream to start. You’re locking in a guaranteed income stream for yourself by establishing a safety net down the road.
In a world with no pensions, younger workers may want to plan for their own lifetime income guarantees as well. You might consider a QLAC as early as your 40s (typically, your peak earning years).
Even the Treasury Department and IRS are concerned about people running out of money in retirement. They ruled that QLACs now have additional benefits when used in traditional IRAs and participating 401(k)s. Specifically, they…
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1) Have a guaranteed income stream that can start from age 71 to age 85, and can be set up to pay joint life with your spouse 2) Lower your taxes on your RMDs (Required Minimum Distributions). |
By deferring the income start date, insurance carriers enhance QLAC payouts. And, along with a lifetime income guarantee, with QLACs, you can:
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— Add family members… — Use a COLA (Cost of Living Adjustment)… — Stack or “ladder” your income start dates. |
Plus, a QLAC strategy has no annual fees. And it’s a simple, easy-to-understand structure.
If this sounds appealing to you, Palm Beach Letter subscribers can read Stan Haithcock’s “QLAC Owner’s Manual” for free right here.