Discuss Latest WCI Blog Post: QLACs — Good Annuities for White Coat Investors

[The White Coat Investor]

Annuities are not usually recommended for readers of The White Coat Investor. But does investing in QLACs actually make sense?

The post QLACs — Good Annuities for White Coat Investors appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.



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[Larry Ragman]

Interesting post from a thought doc turned financial advisor. In fact, David was the first blogger that helped me understand an annuity my employer put me into and why it was potentially useful. https://www.fiphysician.com/investme...iable-annuity/

[G]

I'm curious if the regulars here use or plan to use annuities. On the one hand, I like the argument that it might give me "permission" to spend money. On the other hand, I want for nothing and already have solid numbers (liquid NW and SWR).

Are annuities analogous to long term care insurance -- skip if you have "enough?"

[Tim]

The vast majority of annuities are products sold.
SPIA
QLAC
IOVA

David Graham is NOT an annuity salesman. But he has brought info to the table. What you invest in is a personal choice. Risk vs return.

David (WCI blog) has done an excellent job bringing them all together.

Why annuities? Guaranteed income stream. That is about it. Add bells and whistles if you want. I have a brother that is wanting an additional $3k income stream to cover his basic expenses.
My question is how to buy them? The Fidelity and Vanguard sites aren't easy to find the specific products. No symbols like a stock or mf.

[The White Coat Investor]

I'm curious if the regulars here use or plan to use annuities. On the one hand, I like the argument that it might give me "permission" to spend money. On the other hand, I want for nothing and already have solid numbers (liquid NW and SWR).

Are annuities analogous to long term care insurance -- skip if you have "enough?"

That's my opinion. While I think a SPIA etc can be useful for many, I don't see any reason for ME to buy one.

[blippi]

I'm curious if the regulars here use or plan to use annuities. On the one hand, I like the argument that it might give me "permission" to spend money. On the other hand, I want for nothing and already have solid numbers (liquid NW and SWR).

Are annuities analogous to long term care insurance -- skip if you have "enough?"

i think the parallel to insurance generally is paying for a psychological benefit. If an annuity reassures a hyper-analytic over-saver that they will not die destitute, such that they then spend down and enjoy money rather than hoard and pass it on to heirs that will happily spend it, then it has value.

[StarTrekDoc]

Yes we're planning to use QLAC in IRA as a RMD instrument.

25% of total IRA fund and max 135k the last time.i checked. That will clarify as we approach 70s

[Larry Ragman]

That's my opinion. While I think a SPIA etc can be useful for many, I don't see any reason for ME to buy one.

Although I agree and would not buy one, my wife and I will actually have two annuities in retirement. She inherited a retirement annuity from her sister, and my employer pays for an IOVA for me.

[G]

Yes we're planning to use QLAC in IRA as a RMD instrument.

25% of total IRA fund and max 135k the last time.i checked. That will clarify as we approach 70s

What is the thought process?

[bovie]

I'm curious if the regulars here use or plan to use annuities. On the one hand, I like the argument that it might give me "permission" to spend money. On the other hand, I want for nothing and already have solid numbers (liquid NW and SWR).

Are annuities analogous to long term care insurance -- skip if you have "enough?"

0% chance I ever buy an annuity.

[Tim]

Yes we're planning to use QLAC in IRA as a RMD instrument.

25% of total IRA fund and max 135k the last time.i checked. That will clarify as we approach 70s

25% is historical.
With the Secure Act 2.0, QLAC’s can now be purchased for up to $200,000

[StarTrekDoc]

25% is historical.
With the Secure Act 2.0, QLAC’s can now be purchased for up to $200,000

Yeah, shows you how.uptodate my rmd retirement plans are 🤩

G - QLAC decreases the calculation of RMD by a little and can defer now 200k of assets to 88yo with survival beneficiary too so it's a mechanism there if RMD funds no needed

[Tim]

Yeah, shows you how.uptodate my rmd retirement plans are 🤩

G - QLAC decreases the calculation of RMD by a little and can defer now 200k of assets to 88yo with survival beneficiary too so it's a mechanism there if RMD funds no needed

“You turn 74 in 2023. Using the correlating IRS table, your distribution period is 25.5 and your required minimum distribution for 2023 would be $7,843 ($200,000 ÷ 25.5). You can always withdraw more than the minimum — the RMD is a floor, not a ceiling.”

The difference is less than thought.
QLAC is straight line , the RMD starts lower. The net taxable difference is just math.
Basically it comes down to math. The rates on QLAQ and SPIA are attractive. I have a relative at 75 that is considered.
Not wealthy, more concerned long term care.