Failsafe Plan Description (Infographic Text)
Q: How can I make sure I never run out of money in retirement?
A: Using the Failsafe Plan.
The Failsafe Plan is an easy way to plan retirement disbursements using a Qualified Longevity Annuity Contract (QLAC). The QLACguru “Failsafe” approach maximizes income in retirement while ensuring you never run out of money.
1. Add Up Qualified Assets. Calculate your total qualified assets including IRAs, 401(k)403(b), etc.
2. Calculate Your Maximum QLAC Purchase. This is the lesser of 0.25 x Qualified Assets or $135,000. Check for any other limitations.
3. Calculate Phase I Retirement Years. Count the Number of Years from the Beginning of Retirement until your 85th Birthday. These are your Phase I Years.
4. Calculate Phase I Retirement Income. Subtract Maximum QLAC Purchase Amount from Total Retirement Assets then Divide By Number of Phase-I-Years. This is your Phase I annual income.
5. Get a QLAC Quote for Phase II Income. Use a 'Get Quote' Link on QLACguru.com or another agency to request a QLAC quote. Use the 85th birthday start date. This will be your Phase II Income. Be sure to pick a highly rated carrier.
6. Compare Phase I and II Retirement Incomes. Compare Phase II Income in Step 5 to Phase I Amount Calculated in Step 4.
7. Even Up Phase I and II Incomes. If Phase II Income is greater than Phase I, subtract one year from Step 3 age last used (e.g., 85-1), then repeat Steps 3-6 using new QLAC benefit age. Once the two amounts are approximately equal, you’ve got your plan!
8. Feel free to live a long life! When Phase II and Phase I Income Values are approximately equal, you’re done! Once you buy a QLAC Annuity, the Insurer pays you to live a long life!