I strongly prefer QLACs to immediate fixed annuities (SPIAs) or bonds because the most efficient use of insurance is to hedge only against the specific tail risk that is beyond my risk capacity. I bought a QLAC from New York Life at age 49 to be paid out at 85. For NYL to promise me a high enough lifetime income while charging me just a tiny premium, the chance that they will need to pay me must be as low as I can make it. I own enough liquid assets to last until I'm 85, and the QLAC pushes the RMD of this tiny part of my fixed income portfolio from 72 to 85. Unlike a Roth conversion, buying a QLAC does not trigger taxes.You prefer SPIAs to QLACs perhaps because you want to stay invested in the stock market for as long as possible to maximize growth, but have you considered buying a QLAC instead of holding bonds? Doing so may increase your portfolio efficiency without sacrificing your expected return.
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I strongly prefer QLACs to immediate fixed annuities (SPIAs) or bonds because the most efficient use of insurance is to hedge only against the specific tail risk that is beyond my risk capacity. I bought a QLAC from New York Life at age 49 to be paid out at 85. For NYL to promise me a high enough lifetime income while charging me just a tiny premium, the chance that they will need to pay me must be as low as I can make it. I own enough liquid assets to last until I'm 85, and the QLAC pushes the RMD of this tiny part of my fixed income portfolio from 72 to 85. Unlike a Roth conversion, buying a QLAC does not trigger taxes. You prefer SPIAs to QLACs perhaps because you want to stay invested in the stock market for as long as possible to maximize growth, but have you considered buying a QLAC instead of holding bonds? Doing so may increase your portfolio efficiency without sacrificing your expected return.
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Link to comment from October 23, 2022