A recent retirement study by Allianz highlighted a concern that should matter to every retirement advisor: 67% of Americans worry more about running out of money than death, up from 57% in 2022. The same study also found that market losses create significant anxiety for many retirees and pre-retirees.
That fear is not just emotional. It is practical. Clients are balancing longer life expectancy, market volatility, inflation, health care uncertainty, and the challenge of converting retirement assets into dependable income.
Take some off the top to protect their bottom!
One planning tool that fits this conversation is a Qualified Longevity Annuity Contract (QLAC). A QLAC is not designed to replace the portfolio. It is designed to take a limited portion of qualified retirement assets and convert it into future guaranteed income, no later than age 85. Under current rules, a client may allocate up to $210,000 per person to a QLAC in 2026. This amount is indexed for inflation. Launch the following link to learn more.
Integrated Insight on DIAs and QLACs
We recently used a client-facing analysis to show this in practical terms. The goal was not to prove that a QLAC always beats investing. It does not. The better question is whether the client wants a contractual late-life income safety net if they live to 85, 90, 95, or beyond. It is “protection planning” added to support the “projection plan”.
Additional QLAC benefits
For clients with larger IRA balances, the RMD impact can also be meaningful. The QLAC amount is excluded from the IRA balance used to calculate required minimum distributions before the annuity income begins, subject to IRS rules and the actual contract design. A QLAC may create more confidence around spending and gifts including qualified charitable distributions.
A QLAC will not fit every client. It is less suitable when liquidity, legacy value, inflation adjustment, Roth conversion flexibility, or full control of capital are primary objectives. But for healthy clients with enough near-term liquidity and real concern about outliving money, it can provide something a portfolio cannot provide by itself: guaranteed lifetime income starting later in retirement.
If you have a client who is concerned about running out of money later in life, this may be worth a discussion.