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Transcript

The QLAC Master Class · Suze Orman's Women & Money (And Everyone Smart Enough To Listen)

• 0:08
  KT: It is August 30th, 2026.
• 0:11
  Suze: I'm so proud of you for knowing the date 26.
• 0:14
  KT: It's KT here with Suze.
• 0:16
  Suze: Are they all wondering why is KT here on a Sunday?
• 0:20
  Suze: Because it's usually ask KT and Suze Anything.
• 0:23
  KT: Today's Suze School,
• 0:24
  Suze: But it will be also Suze School.
• 0:26
  KT: Wait, I wanna share a few things with everyone.
• 0:28
  Suze: You know, I love that we do a combination sometimes
• 0:32
  Suze: of you with some emails, me with Suze School doesn't
• 0:35
  Suze: always have to be one or the other, right?
• 0:38
  KT: Right. But I, I have a couple things I want
• 0:40
  KT: to share. I'm not staying for Suze School, by the way.
• 0:44
  KT: I'm skipping class. It's about that QLAC she promised all
• 0:48
  KT: of you. So I want you, I wanna share my
• 0:51
  KT: news first, then I'm out of here.
• 0:53
  Suze: I just want everybody to take note. KT does not
• 0:56
  Suze: care what I wanna say. She does not care how
• 0:59
  Suze: I wanna say it when she wants to say something, she wants to say it.
• 1:01
  KT: You're all gonna love this.
• 1:05
  Suze: So what is so important that you want to tell everybody?
• 1:08
  KT: On last Thursday, August twenty-seventh, we talked about this very,
• 1:14
  KT: very interesting and very compelling email that one of our
• 1:19
  KT: listeners sent in about the boyfriend, the loser boyfriend...
• 1:23
  Suze: The one that doesn't know his "A" from a hole
• 1:25
  Suze: in the ground.
• 1:26
  KT: Don't say that...
• 1:27
  Suze: But it's true.
• 1:28
  KT: So wait, so this, she wrote back, wait, so here's
• 1:32
  KT: what she said. This was from Shame & Heartbreak. That's
• 1:34
  KT: how she signed it... August 27th. If you have not heard this,
• 1:39
  KT: go back and just listen to the beginning of August 27th.
• 1:43
  Suze: So before you read that, I think it's important, everybody,
• 1:47
  Suze: that one podcast, we got more emails and responses and anger,
• 1:56
  Suze: anger towards this person that she's talking about in this
• 2:00
  Suze: email that she wrote about her ex-boyfriend than ever before.
• 2:05
  Suze: So sometimes you hear me give a serious slap down,
• 2:08
  Suze: which I did, so did KT in her own sweet way, right.
• 2:13
  Suze: But we never know how does the person who it
• 2:16
  Suze: pertains to, what do they think? How do they feel? Well, everybody,
• 2:21
  Suze: she wrote back.
• 2:21
  KT: Listen to what she wrote, and, and I'm not gonna
• 2:24
  KT: tell you what that podcast was. You have to go
• 2:26
  KT: listen to it. August 27th, last Thursday. Listen up, and
• 2:31
  KT: this is the response that she, Shame & Heartbreak. That's
• 2:35
  KT: how she signed her email.
• 2:37
  Suze: But She doesn't have any shame and heartbreak anymore, shame anymore.
• 2:41
  KT: She wrote, Suze, I have been listening to the podcast
• 2:45
  KT: over and over again since it was posted last Thursday.
• 2:51
  KT: I heard you and KT really, truly heard you, and
• 2:55
  KT: I am taking it all in, and I will do
• 2:58
  KT: what you both say. I didn't even think of checking
• 3:02
  KT: to see what people are saying, but I just looked
• 3:05
  KT: and I'm so thankful for all the comments.
• 3:08
  KT: So she's thanking all of you listeners that actually weighed
• 3:12
  KT: in on the Women in Money app and then this
• 3:15
  KT: is the part I like the best. Please tell KT
• 3:18
  KT: that she is right.
• 3:20
  KT: He, the ex-boyfriend, has been trying to come back, and
• 3:24
  KT: I have been ignoring him and have blocked him. I
• 3:27
  KT: will take your advice and short that stock. That was
• 3:31
  KT: Suze said, if he was a stock, I'd short him,
• 3:34
  KT: and I said to her, I'm sure he's gonna try
• 3:36
  KT: to come back and get together with you again. Don't
• 3:39
  KT: give in.
• 3:40
  KT: So then she wrote, you and KT reading and responding
• 3:44
  KT: to my email and then doing a podcast about it
• 3:47
  KT: means so much to me. You both are angels and
• 3:51
  KT: I really needed you and obviously you knew how much
• 3:55
  KT: I needed your help. You both are the best. I'm
• 3:58
  KT: so thankful for all the time you gave to me
• 4:01
  KT: and my situation, and then she signs off, I hope
• 4:05
  KT: it helps others too.
• 4:07
  KT: I'm happy for her. I'm happy for all of you
• 4:10
  KT: that weighed in and for those of you that missed
• 4:13
  KT: last Thursday, go listen. You won't believe what this guy
• 4:16
  KT: was doing, right?
• 4:17
  Suze: Here's what I wanna say to this, KT, seriously.
• 4:22
  Suze: A lot of you ask me why do KT and
• 4:26
  Suze: I keep working? Why do we keep doing this? And
• 4:30
  Suze: you need to stop asking me that because it gets
• 4:33
  Suze: me to wonder why do we do this? We obviously
• 4:37
  Suze: don't do it for money. We do it for many,
• 4:39
  Suze: many reasons that have nothing to do with money, and
• 4:43
  Suze: this is one of the reasons why.
• 4:46
  Suze: I've always believed from the bottom of my heart if
• 4:48
  Suze: this podcast can just change or help one person, just
• 4:54
  Suze: one person, then it is absolutely worth it. And you know,
• 5:00
  Suze: KT the other day we were in New York, somebody
• 5:03
  Suze: came up to me, we were sitting waiting to get
• 5:06
  Suze: on the plane.
• 5:07
  Suze: And she came up to me and started to tell
• 5:10
  Suze: me her situation. Tell everybody what happened when she left.
• 5:14
  Suze: Tell everybody.
• 5:15
  KT: I haven't seen this happen in a long time, but
• 5:18
  KT: it's happened occasionally. So we're in the lobby and we're
• 5:23
  KT: waiting to board our flight.
• 5:25
  KT: And one of the actual employees of the airline came
• 5:29
  KT: up to Suze, kneeled down, and I looked over thinking,
• 5:33
  KT: oh no, they're whispering that our flight's been delayed or
• 5:36
  KT: canceled due to weather, but no, she stayed and talked
• 5:40
  KT: to Suze in a whisper for at least 15 minutes,
• 5:44
  KT: and Suze was whispering back a lot of advice, information,
• 5:50
  KT: she was taking notes, um, at the end...
• 5:55
  KT: ...she walked away because she had to go back to
• 5:57
  KT: her job, and I looked at Suze, and Suze did
• 6:02
  KT: everything she could to hold it in, but she actually
• 6:05
  KT: started crying. Suze started to get very teary and couldn't
• 6:10
  KT: talk to me.
• 6:11
  KT: And Suze wrote on a piece of paper her email
• 6:14
  KT: address and phone number for this woman because it moved
• 6:18
  KT: her that much. Now I don't know if you wanna share...
• 6:22
  Suze: No, what she told me doesn't matter...
• 6:24
  KT: But it was heartbreaking, to, to you.
• 6:28
  Suze: There's so many times. That life doesn't seem like it's fair,
• 6:34
  Suze: that there are situations with marriage and children and all,
• 6:39
  Suze: and it's just so sad, so sad, so we do
• 6:46
  Suze: it because many of you touch our hearts.
• 6:51
  Suze: Even when there are incredible success stories, those stories touch
• 6:56
  Suze: our hearts as well, because you listened over all these years, right?
• 7:02
  Suze: So for some reason, I just wanted to tell you
• 7:05
  Suze: all that story, but here's what's sad, KT I haven't
• 7:09
  Suze: heard from her.
• 7:10
  Suze: I've been looking for her email and it's never come,
• 7:14
  Suze: so the moral to the story is if you ever
• 7:18
  Suze: see me in person and I give you my personal email,
• 7:23
  Suze: you are not to be afraid. You better write me
• 7:26
  Suze: and let me help you because when I go that far,
• 7:31
  Suze: it's because you have really touched my heart, however...
• 7:35
  Suze: There are times when many of you are getting what
• 7:39
  Suze: you think are emails from me and they are not.
• 7:46
  Suze: So KT read your last email before I go on
• 7:47
  Suze: to Susie's school.
• 7:48
  KT: OK, so this one was really important, and we both
• 7:52
  KT: agreed that we must share it with all of you.
• 7:55
  KT: So you know that the world of scamming and all
• 7:58
  KT: of this.
• 7:59
  KT: You know, internet fraud is, is not going away. Matter
• 8:03
  KT: of fact, it's getting worse, and this is one that
• 8:06
  KT: I just received. It was called info @ MeetSuzeOrman.com.
• 8:12
  KT: Hello, I've had an intermittent email communication with the email
• 8:17
  KT: address in the subject line for about a year.
• 8:21
  Suze: And that email address was what KT just...
• 8:24
  KT: Info@meetsuzeorman.com.
• 8:27
  Suze: Which is not me. It is not me. It is
• 8:30
  Suze: not me. Go on.
• 8:31
  KT: It arrived after I filled out a questionnaire that I
• 8:35
  KT: thought was from your official site.
• 8:38
  KT: Long story short, I was supposed to have a conversation
• 8:41
  KT: with somebody today between 3 and 4 p.m. regarding financial planning.
• 8:47
  KT: They did not call until 6 p.m. and I'm still
• 8:51
  KT: hesitant to talk to them because I had not been
• 8:54
  KT: able to find a way to verify them. Now listen
• 8:58
  KT: to this very carefully, everyone.
• 9:00
  KT: This woman was smart enough. Her name's Lauren. She said
• 9:04
  KT: she could not find a way to verify info @ meetSuzeOrman.com.
• 9:11
  Suze: Because it's a scam.
• 9:12
  KT: She's smart. Lauren, you're smart. Then she said, I asked
• 9:15
  KT: them to call me back tomorrow. I think this is
• 9:18
  KT: a scam. Can someone from your team, Suze, please respond
• 9:22
  KT: to me? If it is indeed from your team, I
• 9:26
  KT: don't wanna lose the opportunity. However, I can't afford to
• 9:31
  KT: lose any money. Thank you very much. So we got
• 9:35
  KT: back to her privately, but we're sharing this with all
• 9:39
  KT: of you. Info @ meetSuze Orman.com does not exist from us.
• 9:45
  Suze: If you, but it's more important than that, KT. I
• 9:49
  Suze: have told you time and time again.
• 9:53
  Suze: That you will never get an email from me saying
• 9:58
  Suze: I wanna meet with you. Let's have a meeting about
• 10:01
  Suze: financial planning. Let's go over things together ever, ever, ever
• 10:06
  Suze: have I not told you that? Also, one of the
• 10:10
  Suze: reasons in the past we changed our email address for
• 10:14
  Suze: all of you to send in a question.
• 10:18
  Suze: And we changed it to podcast@askSuze.com. And that's because that
• 10:26
  Suze: really can't be hacked into. That there are many safeguards
• 10:30
  Suze: on that. A Gmail address that we had before and
• 10:33
  Suze: all of that. Do not use that email address that
• 10:38
  Suze: we used to have, which was ask Suze podcast@gmail.com. Don't
• 10:43
  Suze: use it. Don't use it, don't use it.
• 10:45
  KT: Tell them one more time the one that is correct.
• 10:48
  Suze: Right, so podcast@askSuze.com. Do you understand me? So, if you
• 10:55
  Suze: happen to write in on a Gmail address, it doesn't
• 10:58
  Suze: hurt you to send in your question again to the
• 11:01
  Suze: correct email address. But I will never, ever, ever say
• 11:07
  Suze: to you, let's talk.
• 11:09
  KT: So I, I have to remind everyone also the reason
• 11:13
  KT: this is so important that you pay attention and this
• 11:16
  KT: is the reason that Susie had been working for two
• 11:20
  KT: years to develop with CoverOn the ultimate scam and identity
• 11:25
  KT: theft protection program. You've got to look into it. Go
• 11:29
  KT: to her website, go to SuzeOrman.com and look at this,
• 11:33
  KT: click on it and check it out. It's really, really
• 11:37
  KT: protecting everyone.
• 11:39
  Suze: You have to check it out. And by the way,
• 11:41
  Suze: when you go to SuzeOrman.com, to just check the Ultimate
• 11:45
  Suze: Scam and Identity Theft Protection Program. Can you just scroll
• 11:49
  Suze: down and there's a comparison between that one from CoverOn
• 11:54
  Suze: and all the other programs that are out there, and
• 11:58
  Suze: you will see that CoverOn's is the best deal, at
• 12:02
  Suze: least this one, that I'm talking to you about. All right, Ms. Travis.
• 12:08
  KT: I think your time's up.
• 12:10
  Suze: My time's not up, but I am going to be
• 12:12
  Suze: doing a Suze school, so you need to skadoodle because
• 12:16
  Suze: you distract.
• 12:16
  KT: OK, everybody, enjoy the QLAC lesson.
• 12:20
  Suze: Do you know what QLAC stands for? Do you remember?
• 12:24
  Suze: No, just say no.
• 12:25
  KT: I'll wait for you to tell everyone what QLAC means.
• 12:28
  Suze: All right, fine.
• 12:29
  KT: All right, bye, everyone. See you next week.
• 12:34
  Suze: All right, now. And there she goes. So you know what that means?
• 12:39
  Suze: That Suze School is now in session, which means you
• 12:43
  Suze: need to get out your Suze notebooks, 'cause I have
• 12:47
  Suze: a feeling you really want to take notes on this one.
• 12:51
  Suze: Do you remember a week or two or three ago,
• 12:54
  Suze: somebody wrote in a question about QLACs that stands for
• 13:00
  Suze: Qualified Longevity Annuity Contract, and I started to answer it
• 13:04
  Suze: and I said, wait a minute, this deserves an entire
• 13:08
  Suze: Suze School. And the reason that I said that is
• 13:12
  Suze: that I have been getting so many emails, all of
• 13:16
  Suze: a sudden.
• 13:18
  Suze: In all the years I've been doing this, all of
• 13:22
  Suze: a sudden I'm getting emails about Suze, what do you
• 13:26
  Suze: think of qualified longevity annuity contracts? Suze, I have this
• 13:31
  Suze: in my 401k. Should I do a qualified annuity contract
• 13:35
  Suze: over and over and over again, and I have to
• 13:39
  Suze: be wondering what is going on.
• 13:43
  Suze: That all of a sudden I'm getting so many emails
• 13:48
  Suze: about QLACs. Why? And then I'm thinking it makes me wonder,
• 13:55
  Suze: is somebody out there that has a large following and
• 13:59
  Suze: they happen to be talking about qualified longevity annuity contracts, QLACs.
• 14:06
  Suze: Because something's gotta be going on where somebody is talking
• 14:10
  Suze: about them, recommending them, probably asking you to give them
• 14:15
  Suze: your information and they'll connect you with an annuity specialist.
• 14:19
  Suze: I don't know what, but something is going on and
• 14:23
  Suze: I just want to say something about that.
• 14:27
  Suze: When somebody is on the air and they are, whether
• 14:31
  Suze: it's a podcast, TV show, whatever it may be, and
• 14:36
  Suze: they are telling you about a product that they want
• 14:40
  Suze: you to do, such as a QLAC, all right, if
• 14:45
  Suze: they're getting a commission for it...
• 14:48
  Suze: They need to say to you, and if you buy
• 14:51
  Suze: this qualified longevity annuity contract from the person that I'm
• 14:56
  Suze: sending you to, I get to split the commissions or
• 15:01
  Suze: I get some money for it. If they're not saying
• 15:05
  Suze: that anywhere on their sites or when they're presenting, it
• 15:10
  Suze: is up to you, everybody, to ask that person, if
• 15:14
  Suze: I use the person that you're recommending, do you get
• 15:19
  Suze: any money now?
• 15:20
  Suze: There's nothing wrong with that as long as they are
• 15:24
  Suze: honest about it, you know, for years now I have
• 15:29
  Suze: been recommending a woman by the name of Phyllis Shelton
• 15:33
  Suze: and her company at Phyllis@gotltc.com. I've been doing it since
• 15:38
  Suze: 1995 for long-term care insurance.
• 15:42
  Suze: Over and over and over again.
• 15:47
  Suze: Do you think I have ever gotten one penny, a
• 15:51
  Suze: referral fee, one cent from Phyllis, or any of the
• 15:55
  Suze: people that work with her over all those years? I
• 15:58
  Suze: have not. I'll tell you what I have gotten hundreds
• 16:02
  Suze: of thank you letters from all of you who have
• 16:06
  Suze: used her and her company and have said, Oh, she
• 16:09
  Suze: was so great. She told me I didn't need to
• 16:11
  Suze: do anything, nothing. My reason for recommending somebody is because
• 16:17
  Suze: I think they are the best at what they do.
• 16:21
  Suze: So I just want to tell you that because something
• 16:26
  Suze: is going on out there. Some person is recommending these
• 16:30
  Suze: that has a big following and you just better make
• 16:34
  Suze: sure that they're telling you that they're making money from
• 16:38
  Suze: it or they're telling you they are not making money
• 16:41
  Suze: from it. They just need to be honest, all right.
• 16:45
  Suze: Now back to QLACs, OK? Listen, one of the biggest
• 16:51
  Suze: selling points of a QLAC is a way for you
• 16:55
  Suze: to reduce your required minimum distributions or RMDs if you
• 17:00
  Suze: do not need them. And at the same time, the
• 17:05
  Suze: selling point is to create an income stream that starts
• 17:10
  Suze: later on in your life that you cannot outlive.
• 17:15
  Suze: They can be good. I don't have a problem with them,
• 17:17
  Suze: but you have to know about them. So here's the
• 17:21
  Suze: first thing, everybody, that I really want you to write down.
• 17:25
  Suze: A QLAC is not an investment.
• 17:29
  Suze: It is insurance against outliving your money. If you are
• 17:34
  Suze: judging it only by the investment return or you're going
• 17:38
  Suze: to save taxes by reducing RMDs, you're asking the wrong questions.
• 17:44
  Suze: That is not the only reason you should be doing this.
• 17:48
  Suze: The right question, is whether you need to insure the
• 17:52
  Suze: financial risk of living to 90, 95, or 100. Now
• 17:58
  Suze: if any of you have read the Ultimate Retirement Guide
• 18:02
  Suze: for 50+, and a lot of you have, and it's
• 18:05
  Suze: out in softback now, so you should take a look
• 18:07
  Suze: at it, however, part of your retirement plan was if
• 18:13
  Suze: you didn't have enough income, you had money in a
• 18:16
  Suze: retirement account, maybe uh immediate annuity or QLAC might be
• 18:22
  Suze: for you.
• 18:24
  Suze: But you need to know because a QLAC is a
• 18:28
  Suze: special type of deferred income annuity that you can only
• 18:33
  Suze: buy with money from an eligible pre-tax retirement account like
• 18:38
  Suze: a traditional IRA or from an employer plan such as
• 18:42
  Suze: let's say a 401k, a 403B, or 457 if your
• 18:47
  Suze: plan makes QLACs available in them.
• 18:50
  Suze: You cannot buy this, by the way, if you will
• 18:53
  Suze: listen to me over all the years, thank God, in
• 18:57
  Suze: a Roth IRA or any Roth retirement account of any kind.
• 19:02
  Suze: And why is that?
• 19:04
  Suze: Because you don't have required minimum distributions at all in
• 19:09
  Suze: a Roth account, so you don't have an RMD problem.
• 19:14
  Suze: There are other ways for you to solve income, but
• 19:18
  Suze: not with a QLAC. All right, so how does a
• 19:21
  Suze: QLAC work?
• 19:23
  Suze: Simple. You give an insurance company a lump sum of
• 19:26
  Suze: money from your retirement account in exchange, listen to me,
• 19:30
  Suze: the company promises to start paying you a stated income later,
• 19:36
  Suze: and that income can continue for the rest of your life.
• 19:42
  Suze: Payments can begin any time you want, usually around the
• 19:46
  Suze: age of 78, 80, 83, right in there, but no
• 19:51
  Suze: later than the first day of the month after you
• 19:54
  Suze: have turned 85.
• 19:57
  Suze: Again... You can start earlier if you want, but no
• 20:02
  Suze: later than that. OK, now you have 90 days from
• 20:08
  Suze: the day that you purchase it to say, you know what,
• 20:12
  Suze: I don't want this. It's just I want out. But
• 20:16
  Suze: after those 90 days it is final and the money
• 20:21
  Suze: is committed. In most cases you cannot get it back.
• 20:27
  Suze: Write this down.
• 20:30
  Suze: For 2026, the maximum premium is $210,000 per person, across
• 20:41
  Suze: all QLACs held for that person. This is not $210,000
• 20:48
  Suze: per IRA. It is not $210,000 per insurance company.
• 20:55
  Suze: It is the combined limit of all of your IRAs,
• 21:01
  Suze: but it cannot exceed $210,000 for 2026. Got that, everybody? Also,
• 21:12
  Suze: a lot of you have been asking. There was an
• 21:15
  Suze: old rule a while ago before Secure 2.0 that capped
• 21:19
  Suze: a QLAC at 25% of the retirement balance. That's gone, everybody,
• 21:25
  Suze: so don't worry about it. Now, to make this clear
• 21:28
  Suze: how a QLAC works, let me give you a real
• 21:31
  Suze: life scenario, OK? Let's just say you're gonna be 73
• 21:36
  Suze: next year.
• 21:37
  Suze: And you're going to have to start taking required minimum
• 21:41
  Suze: distributions at that time. And let's just say you have
• 21:44
  Suze: $1 million in your pre-tax retirement accounts.
• 21:50
  Suze: Given that to figure your RMD we have to use
• 21:56
  Suze: the uniform lifetime table for somebody 73, OK? And the
• 22:02
  Suze: RMD using that table on $1 million your RMD that
• 22:08
  Suze: year would be about $37,736. OK? Remember your RMD, in
• 22:20
  Suze: the year you turn 73 currently is figured on your
• 22:25
  Suze: ending retirement balance at the end of the year prior
• 22:31
  Suze: to you turning 73, so December 31st, whatever the balance
• 22:36
  Suze: is on that day, that is the amount of money
• 22:40
  Suze: that your RMD is figured on. So even if you
• 22:44
  Suze: don't need that money, you have to take it.
• 22:47
  Suze: And obviously that money is taxed to you as ordinary income. OK,
• 22:53
  Suze: let's say though, before you turn 73 next year, you
• 22:58
  Suze: decide to buy a QLAC and you decide to max
• 23:01
  Suze: it out and put $210,000 with pre-tax dollars, money that's
• 23:08
  Suze: in your IRA goes into the QLAC. So after you
• 23:13
  Suze: purchase it,
• 23:15
  Suze: no taxes on it. At the end of the year, you,
• 23:18
  Suze: let's just say have now $790,000 in your IRA.
• 23:25
  Suze: And you have 210,000 in your QLAC. You still have
• 23:29
  Suze: a million, but only 790,000 will be figured for RMDs. So,
• 23:37
  Suze: if you figure your RMD on 790,000.
• 23:43
  Suze: That's $29,811 that you're gonna have to withdraw, and that's
• 23:49
  Suze: a reduction of approximately $7,925 for that year. Now, you
• 23:54
  Suze: have to ask yourself, is that valuable? Well, it can
• 23:59
  Suze: be because a lower RMD will also reduce your taxable income.
• 24:04
  Suze: And it may help you out there manage your tax brackets,
• 24:08
  Suze: the taxation of Social Security, Medicare income, all of that, OK?
• 24:13
  Suze: But I need you to understand something the tax did
• 24:17
  Suze: not disappear when the QLAC payments begin.
• 24:22
  Suze: Payments that are funded entirely, think about this with pre-tax money.
• 24:29
  Suze: When they begin and let's say they begin at the
• 24:31
  Suze: age of 85, you're going to have to pay ordinary
• 24:36
  Suze: income tax on that money as it comes out. Now,
• 24:40
  Suze: possibly at the age of 85, you may have now
• 24:45
  Suze: QLAC income, RMDs from the retirement money that may remain
• 24:49
  Suze: in your IRA because you're not gonna use all of it.
• 24:53
  Suze: You've only used 210,000 of it. You still had 790,000
• 24:58
  Suze: in there, remember that. And maybe it's grown over all
• 25:02
  Suze: of these years as well. So you're gonna have income
• 25:06
  Suze: at the age of 85 from QLAC, RMDs from the
• 25:10
  Suze: money that remains in your IRAs, Social Security, possibly a pension,
• 25:14
  Suze: all arriving at the same time.
• 25:17
  Suze: So the QLAC changes the timing. Do you understand this, everybody,
• 25:21
  Suze: of your taxable income? It does not wave a wand
• 25:25
  Suze: and erase it. If you wanted to erase it, the
• 25:29
  Suze: best way to have done it would have been converting
• 25:31
  Suze: this money to Roth accounts where you didn't have any RMDs,
• 25:38
  Suze: and then you always had that money, but that's another story.
• 25:42
  Suze: That's not what we're talking about, so.
• 25:47
  Suze: A QLAC really can solve one specific problem. What happens
• 25:53
  Suze: if you live a very, very long time and need
• 25:58
  Suze: guaranteed income later in life? That for me is the
• 26:02
  Suze: only reason I would really want you to buy this,
• 26:06
  Suze: all right.
• 26:07
  Suze: So, let me give you 5 advantages in my opinion,
• 26:11
  Suze: of COs, and then I'm gonna give you maybe 7
• 26:13
  Suze: or 8 of disadvantages. Advantage 1, and the best argument
• 26:18
  Suze: for a COC, in my opinion, is guaranteed lifetime income.
• 26:26
  Suze: Look what's happening even now. Markets can fall. They can
• 26:30
  Suze: go up. Interest rates can change. You can live longer
• 26:33
  Suze: than any spreadsheet you assume. Are you taking 3% out, 4%?
• 26:38
  Suze: So it can be very confusing. A properly structured lifetime
• 26:43
  Suze: QLAC that keeps paying as long as the covered person
• 26:47
  Suze: is alive, subject to certain things could be a great
• 26:53
  Suze: thing as long as the insurance company is able to
• 26:57
  Suze: meet its obligations, OK?
• 27:01
  Suze: Now this can be especially valuable for someone who has
• 27:05
  Suze: Social Security but no pension.
• 27:08
  Suze: And a lot of you, that's all you have, and
• 27:11
  Suze: you're afraid and you want guaranteed income and everything you
• 27:17
  Suze: have or a lot of what you have is in
• 27:20
  Suze: a pre-tax retirement account. Remember what have I always told
• 27:25
  Suze: you the goal of money is for you to be secure.
• 27:29
  Suze: So, if that makes you feel secure, I would never
• 27:32
  Suze: put 100% of everything in your retirement account in a QLAC,
• 27:36
  Suze: but if it makes you feel secure, you should look
• 27:40
  Suze: into it and maybe think of a QLAC as creating
• 27:44
  Suze: a personal pension that switches on later in life, right?
• 27:49
  Suze: And that's really when the risk of running out of
• 27:52
  Suze: money becomes more dangerous, OK, so think about that.
• 27:56
  Suze: Advantage 2, it really can make the early retirement years
• 28:01
  Suze: easier for you to plan.
• 28:03
  Suze: So what do I mean by that? If you happen
• 28:06
  Suze: to know that you're gonna get a guaranteed payment in
• 28:09
  Suze: a schedule to begin at 78, 80, 85, whatever age
• 28:13
  Suze: you choose, you may be able to plan spending from
• 28:17
  Suze: retirement through that age with more confidence. A lot of
• 28:21
  Suze: you always say to me, Suze, I'm afraid I'm gonna
• 28:24
  Suze: run out of money. What happens if they get rid
• 28:26
  Suze: of Social Security? All of those things, so...
• 28:31
  Suze: It's something that's important and this obviously can also protect
• 28:36
  Suze: you against bad investment decisions at advanced ages. So many
• 28:42
  Suze: times when you're older, in your 80s, in your 90s,
• 28:46
  Suze: you write me and you say, somebody just told me
• 28:50
  Suze: I should put all my money in Moderna stock. I'm
• 28:53
  Suze: making a joke from earlier in today's podcast.
• 28:55
  Suze: But somebody might tell you to do something with your
• 28:59
  Suze: money that you think is a good thing.
• 29:02
  Suze: And you don't know, is it or is it not?
• 29:05
  Suze: So a monthly check can be really simpler than managing
• 29:10
  Suze: a portfolio, really, it can.
• 29:13
  Suze: Advantage 3. Right. Here is why an annuity, now listen
• 29:19
  Suze: to me closely, can produce more lifetime income per dollar,
• 29:24
  Suze: in my opinion, than a bond portfolio, which so many
• 29:29
  Suze: of you have, because a bond portfolio is designed usually
• 29:35
  Suze: to preserve principal, but I don't know, bonds are a
• 29:38
  Suze: little crazy right now.
• 29:40
  Suze: So in an insurance pool, and a QLAC operates as
• 29:45
  Suze: an insurance pool. Listen to me closely, some owners die
• 29:50
  Suze: earlier than expected, and some live longer. The people who
• 29:56
  Suze: live longer benefit from what are called mortality credits.
• 30:02
  Suze: That is the insurance part of the contract. OK, now
• 30:06
  Suze: why am I telling you this? Because that's how they
• 30:10
  Suze: figure out what your income should be. And the longer
• 30:15
  Suze: you defer the start date, the higher the promised monthly
• 30:20
  Suze: payment will generally be. But here's what I'm warning you
• 30:24
  Suze: of I do not want you to let a salesperson
• 30:28
  Suze: all of a sudden hypnotize you with a larger number.
• 30:31
  Suze: A payment starting at 85 should be everybody larger than
• 30:36
  Suze: one starting at 78 because you gave up access to
• 30:41
  Suze: the money for longer years and there may be fewer
• 30:46
  Suze: expected payments. So just know what year you really are
• 30:51
  Suze: going to need to start and don't judge it on
• 30:55
  Suze: a higher amount, judge it on the age that you
• 30:59
  Suze: think you're really going to need it.
• 31:01
  Suze: All right Advantage 4. Once the contract is issued. The
• 31:10
  Suze: promised fixed payment does not fall. Now that is important.
• 31:16
  Suze: Because for those of you who are in the stock market,
• 31:20
  Suze: even if you are invested in the stock market in
• 31:22
  Suze: dividend paying stocks, which you know I love, it is
• 31:26
  Suze: possible that they can decrease the dividend. Things can happen again.
• 31:32
  Suze: The stock market falls, whatever, and knowing that the payment
• 31:37
  Suze: that you're gonna get is fixed and nothing can happen
• 31:39
  Suze: to it can be emotionally powerful. I have to tell
• 31:43
  Suze: you it can.
• 31:44
  Suze: And the last advantage is that really a QLAC can
• 31:49
  Suze: be structured to cover one life or two lives, such
• 31:53
  Suze: as a spouse. It can also offer a return of
• 31:57
  Suze: premium at death benefit so that if the owner dies
• 32:00
  Suze: before receiving back the premium through the payments, the unpaid
• 32:05
  Suze: premium can go to a beneficiary under the contract rules
• 32:08
  Suze: and on and on.
• 32:10
  Suze: Now those protections matter, but I have to tell you
• 32:13
  Suze: they are not free. A joint and survivor option, a
• 32:18
  Suze: return of premium feature, or an inflation protection will generally
• 32:23
  Suze: reduce the initial monthly income, everybody, so you cannot compare
• 32:28
  Suze: two quotes by looking only at the payment. You have
• 32:32
  Suze: to compare every contract choice. Got that?
• 32:38
  Suze: Now what are the disadvantages? Disadvantage 1.
• 32:43
  Suze: And I have to tell you this is the big
• 32:45
  Suze: one if you ask me. Once your contract is locked again,
• 32:49
  Suze: usually about 90 days after you bought it, you generally
• 32:53
  Suze: cannot call the insurance company, let's say at age 78,
• 32:57
  Suze: and say I changed my mind. I need the money for, uh,
• 33:01
  Suze: home care, for a new roof for my spouse, my child.
• 33:05
  Suze: The whole point of the QLAC rules is that it
• 33:09
  Suze: is not a liquid account, unlike a bond that you
• 33:14
  Suze: can buy and sell, stock that you can buy and sell,
• 33:18
  Suze: after those 90 days after you purchased, it is locked,
• 33:22
  Suze: and you will never be able to get a penny back.
• 33:26
  Suze: Got that?
• 33:28
  Suze: Now, If you decide to buy a QLAC, and this
• 33:31
  Suze: leaves you short of an emergency fund, then the purchase,
• 33:35
  Suze: I have to tell you, is just wrong. I don't
• 33:38
  Suze: care how attractive the income looks. You never lock up
• 33:42
  Suze: money that stands between you.
• 33:45
  Suze: And financial desperation, cause that's what happens when you need
• 33:49
  Suze: money and you can't get it, you get totally desperate
• 33:54
  Suze: disadvantage too.
• 33:57
  Suze: And this is important. A fixed payment that looks generous
• 34:02
  Suze: today may feel much smaller 15 or 20 years, whatever
• 34:06
  Suze: it is from now, at a 3% annual inflation.
• 34:11
  Suze: You have to understand that prices roughly double in about
• 34:16
  Suze: 24 years, so a monthly payment of $2,000 will only
• 34:22
  Suze: have purchasing power close to like $1,000 or so after
• 34:27
  Suze: 20 years, you know, just put a pin in that
• 34:30
  Suze: for a second. I'll never forget reading Life magazine.
• 34:34
  Suze: And they used to have a picture. I was a
• 34:36
  Suze: kid and I don't know why I would think like
• 34:39
  Suze: this when I was a kid. They had this picture
• 34:41
  Suze: of this guy in a little boat and it says,
• 34:46
  Suze: I retired on $153 a month from my annuity.
• 34:53
  Suze: And for some reason I thought, boy, I sure hope
• 34:57
  Suze: $153 is enough 20 or 30 years from now so
• 35:03
  Suze: you have to think about that, OK, now with that said,
• 35:08
  Suze: there are some contracts that may offer cost of living increases.
• 35:14
  Suze: But the starting income will normally be lower, so the
• 35:19
  Suze: more advantages of leaving your money to a spouse, cost
• 35:23
  Suze: of living increase lowers the actual dollar amount that you
• 35:28
  Suze: start with. Got that? So you have to take that
• 35:32
  Suze: into consideration and you really have to get, listen, there's
• 35:36
  Suze: no free lunch.
• 35:38
  Suze: Unless you go to one of those investment seminars and
• 35:41
  Suze: they give you one to try to hook you in
• 35:43
  Suze: to something, but that is besides the point, OK? But normally,
• 35:47
  Suze: there's no free lunch. You either take more income at
• 35:51
  Suze: the beginning and accept inflation risk or start lower and
• 35:56
  Suze: buy some inflation protection.
• 36:00
  Suze: You have to think about that.
• 36:02
  Suze: Disadvantage 3 if you buy a life only QLAC now
• 36:07
  Suze: if you were single, you didn't have any kids, you
• 36:10
  Suze: had no dependents, whatever, I don't have a problem with
• 36:13
  Suze: you buying a life only QLAC. I don't have it.
• 36:16
  Suze: Just know that if you buy, however, a life only QLAC,
• 36:21
  Suze: which means your payments will be higher, but if you
• 36:25
  Suze: die before payments begin.
• 36:28
  Suze: And have no refund or survivor protection or whatever you
• 36:31
  Suze: may have gotten, there may be nothing for your heirs
• 36:36
  Suze: from that contract. So if you're single, maybe not a problem,
• 36:42
  Suze: but if you are married, you have heirs, whatever, and
• 36:45
  Suze: you want them to have money.
• 36:47
  Suze: Be very careful. Remember this is not the insurance company
• 36:52
  Suze: really cheating you. That is how mortality pooling creates higher
• 36:57
  Suze: income for people who live longer. Do you get that?
• 37:00
  Suze: Some people do life only and they die before they
• 37:04
  Suze: even began payments.
• 37:06
  Suze: But that money goes into the pool to keep everything
• 37:09
  Suze: going for those who do live longer. Just something for
• 37:14
  Suze: you to think about. But if leaving money seriously to
• 37:18
  Suze: children or a charity is a major goal, a life
• 37:22
  Suze: only QLAC might fight that goal. So don't do that.
• 37:27
  Suze: Also remember you can add a return of premium feature,
• 37:32
  Suze: but once again expect a lower payment. Why I keep
• 37:36
  Suze: repeating this is when you go to buy one of
• 37:39
  Suze: these they're gonna offer, do you want this? Do you
• 37:42
  Suze: want that? You want to protect this one for everything
• 37:45
  Suze: you say yes to, it's going to lower the amount
• 37:50
  Suze: of money that you will get in lifetime income. Just
• 37:55
  Suze: know about that. All right.
• 37:57
  Suze: Disadvantage 4.
• 38:01
  Suze: A QLAC is not a bank CD. Everybody, it's not
• 38:04
  Suze: a promise from the federal government. The guarantee depends on
• 38:09
  Suze: the financial strength. Are you listening to me? The financial
• 38:13
  Suze: strength and claims paying ability of the insurance company. So
• 38:20
  Suze: insurance companies are backed by the State Guarantee Association.
• 38:25
  Suze: And that protection may exist, but really you have to
• 38:29
  Suze: know the limits and the rules vary, so you do
• 38:32
  Suze: not buy a decade-long promise from a weak carrier because
• 38:38
  Suze: they quote you a few extra dollars. You need to get,
• 38:42
  Suze: in my opinion, one of the highest rating QLAC companies
• 38:46
  Suze: out there, the highest ratings. You do it on their strength.
• 38:51
  Suze: 'Cause that's important. Therefore, you have to know how do
• 38:55
  Suze: you check the insurer's rating from several rating agencies, not
• 39:00
  Suze: just one.
• 39:02
  Suze: And you have to know what would happen if the insurer,
• 39:06
  Suze: this has happened, were placed into rehabilitation. If all of
• 39:10
  Suze: a sudden they didn't invest their money correctly or whatever,
• 39:14
  Suze: and now they have to be rehabilitated, what does that
• 39:17
  Suze: do to your QLAC? So just maybe if you decide
• 39:22
  Suze: you're committing a large amount and 210,000 is a large amount.
• 39:27
  Suze: You need to consider whether you should divide that purchase
• 39:31
  Suze: among one highly rated company and another highly rated and
• 39:35
  Suze: just make sense that really are within the rules in
• 39:40
  Suze: your state protection. Can you just do that? All right, just, hey,
• 39:44
  Suze: I'm not done yet with the disadvantages, but then why
• 39:47
  Suze: would I be? Because it's an annuity. Anyway, seriously, money
• 39:52
  Suze: inside the QLAC, is no longer available to invest in stocks, bonds, treasury, inflation,
• 40:00
  Suze: protected securities, or anything else. If markets do well, and
• 40:04
  Suze: please listen to me now.
• 40:07
  Suze: If markets do well and over time, over 10 years,
• 40:12
  Suze: 15 years, they usually do the liquid portfolio, meaning money
• 40:18
  Suze: that you left in your IRAs, may leave you with
• 40:22
  Suze: far more wealth and a larger legacy. The QLAC trades
• 40:27
  Suze: upside and access for certainty of income. Did you get that?
• 40:35
  Suze: So that trade can be wise, all right, but do
• 40:38
  Suze: not call the guarantee free because the cost to you
• 40:42
  Suze: is gonna be growth, flexibility, and inheritance potential you gave up.
• 40:50
  Suze: I have a hard time with that. I have to
• 40:52
  Suze: tell you, I just do.
• 40:55
  Suze: Disadvantage 6, if the salesperson leads with, and they all do,
• 41:02
  Suze: this will lower your RMD. I want you to slow down.
• 41:07
  Suze: Slow it down, everybody, cause lowering an RMD is not
• 41:12
  Suze: automatically a win. Remember, you're going to have to eventually
• 41:17
  Suze: take that money out later on. So if you already, however,
• 41:23
  Suze: need the RMD to live on, and let's say many
• 41:26
  Suze: of you do, then reducing it accomplishes absolutely nothing.
• 41:33
  Suze: So, it should be because you want lifelong income. It
• 41:38
  Suze: really should be because you're going to need lifelong income.
• 41:45
  Suze: And last but not least, one company may quote a
• 41:50
  Suze: higher payment because it has no refund at death. Another
• 41:54
  Suze: may include a joint survivor. I'm repeating myself now, but
• 41:58
  Suze: I want you to get this. Another may increase payments
• 42:01
  Suze: with inflation. Another may start one month later.
• 42:06
  Suze: You have to make sure when you compare three or
• 42:09
  Suze: four companies that every QLAC is offering you the exact
• 42:15
  Suze: same start time, the exact same benefits. Every assumption has
• 42:20
  Suze: to be identical, otherwise you are not comparing apples with
• 42:25
  Suze: apples now.
• 42:27
  Suze: A QLAC may make sense seriously for someone in good
• 42:31
  Suze: health with longevity in the family. Maybe you worry more
• 42:37
  Suze: about running out of an income than leaving the largest
• 42:40
  Suze: possible inheritance. It also may fit you really somebody whose
• 42:46
  Suze: Social Security and pension do not fully cover essential spending,
• 42:51
  Suze: who has plenty of liquid money for the years before
• 42:55
  Suze: the payments begin.
• 42:57
  Suze: And maybe you want a predictable income floor in very
• 43:00
  Suze: old age, OK, it really also may make sense for
• 43:05
  Suze: someone with a very large traditional retirement account balance who
• 43:10
  Suze: does not need all of the early RMDs and can
• 43:14
  Suze: use the tax deferral as part of a coordinated really
• 43:18
  Suze: retirement income plan, but no, did you, did you hear
• 43:22
  Suze: what I just said? I said a part of a plan.
• 43:27
  Suze: I would not put every available retirement dollar into a QLAC.
• 43:33
  Suze: I would not merely because the limit allows it. Do
• 43:38
  Suze: you get that? So do I like QLACs? Well, I
• 43:42
  Suze: have to tell you, for the right person in the
• 43:44
  Suze: right amount, with the right carrier and contract.
• 43:49
  Suze: Then I have to tell you, yeah, QLAC can make sense.
• 43:53
  Suze: It is probably one of the few annuity structures that
• 43:56
  Suze: are clean and understandable and that have a purpose that
• 44:00
  Suze: ensures income later in life. But if you are buying
• 44:04
  Suze: it only to reduce RMDs, I don't think so. Now
• 44:10
  Suze: that is your Suzie's school.
• 44:13
  Suze: Just a few things. Don't forget to go to myalliant.com,
• 44:18
  Suze: if you're looking for a good rate on a certificate,
• 44:23
  Suze: go to again, myalliant.com and check out their 12 month
• 44:28
  Suze: certificate currently at 4.10 APY, $75,000 or more, 4.15 APY.
• 44:40
  Suze: Not a bad rate if you ask me. And let's see,
• 44:43
  Suze: is there anything else I wanna tell you?
• 44:46
  Suze: Yeah, there's only one thing that I want you to
• 44:49
  Suze: remember when it comes to your money, and it's this
• 44:51
  Suze: people first, then money, then things. Now you stay safe.
• 44:57
  Suze: All right, bye bye.