It’s very important to me that my readers get factual and accurate information and analysis when it comes to QLACs. All too often, it seems that industry experts miss the point, or provide a slanted view. Case in point, here are two articles that contained some good information, followed by some misleading analysis.
Make sure you do your research and learn all that you can. The security of your retirement income isn’t something to fool around with.
Pros and Cons of the QLAC Annuity Contract
While I agree that no single product such as QLAC is perfect for every retirement plan, it’s important that the analysis leading to the pros and cons be accurate.
Let me address a few issues in the above-mentioned article. Regarding whether a QLAC purchase is problematic in this low interest rate environment, if your savings are at market value and QLAC purchase rates are at market (with six competitors currently, and soon to be ten), then exchanging one investment for another seems reasonable. Moving gradually, of course, may provide some auto-correction.
As to the lack of inflation protection, I couldn’t disagree more. In my recent post on the subject, Providing Yourself with an Increasing Income from QLACs, I outline exactly how to use a “laddering” approach to increase your guaranteed retirement income to keep up with inflation.
Lastly, QLAC should be viewed more broadly. While it might be as much as 25% of an IRA account, it may only represent 10% of the total retirement savings. Either way, QLAC is important for building retirement income.
Keen on Technology-Aided Advisors, Robo-Advisors Not so Much
This article provides some useful, but unsurprising, insight into the fact that higher net worth investors like personal service.
However, the mass affluent and middle markets still need lots of help when it comes to retirement planning and implementation. Different service delivery models will emerge with pure robo-advisor, hybrid delivery with a combination of robo and human advisor, or virtual using the internet and a call center.
While how it’s delivered is important, what’s more important is what’s delivered.