Guaranteed Income and Success


Over the past four and a half years, my firm has been working on a software tool to help Americans think and act differently in preparation for retirement. JourneyGuide  helps identify how a client will meet their spending needs on an after-tax, after-inflation basis. It’s fast, accurate, and it allows you to work with your client not just for your client. 


Important findings have been coming out of the software for some time. I find the most important aspect revolves around guaranteed income and the positive effects it has on the portfolio. 


Earlier this year, we released a study on Qualified Longevity Annuity Contracts (QLACs) which proves they improve the probability of success in retirement portfolios.1 After a QLAC was added, many of the scenarios we tested increased to more than 90 percent probability of having $1 in the portfolio at age 95. What surprised me the most was that the largest improvements were for younger ages (ages 55-60) and more conservative clients. We often think of the traditional income annuity buyer as being 65-plus. This study clearly shows that placing an annuity with younger ages is beneficial. 


Any Guaranteed Income is Good

However, it’s not just deferred (QLAC) or immediate income annuities that improve outcomes. The power of guaranteed income is demonstrated case after case. The ability to provide income that the client will always receive is a powerful story. Purchasing the income and allowing the rest of the portfolio to generate less accomplishes two things:

  • It takes pressure of the portfolio to sustain a high withdrawal strategy 
  • It allows the portfolio to be invested with a long-term focus instead of short-term gains for income


These findings work regardless of income now or income later. The ability to take pressure off the portfolio allows the client to invest longer term, which might provide additional tax relief in the form of long-term capital gains versus ordinary income. Guaranteed income can be found in Social Security, defined benefit income payments or commercially purchased annuities. Those are the only vehicles that support mortality credits and provide income for as long as the client lives. 


Winning Strategy

Go to and request your free demonstration of JourneyGuide. I think you will find the tool can change how your clients think and act in retirement. 


About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon.


1Ash Brokerage, “QLACS Improve Probability of Retirement Success,” 2018:

QLAC Qualified Longevity Annuity Contracts Guaranteed Income Retirement Planning Annuities

The Hidden Impact of QLACs


Soon after Qualified Longevity Annuity Contracts (QLACs) were created in 2014, we put them to the test in a vigorous study. And, we’ve repeated that study every year since. 


Here’s what we’ve learned: While QLACs continue to offer an incentive for pushing required minimum distributions (RMDs) out to age 85 and one month, there are other benefits to consider. In every year that we’ve done the study, a few key takeaways have remained consistent. 


  • QLACs improve retirement outcomes. In our 2018 study, we applied QLACs to four different traditional asset allocation strategies in four different age groups, using market projections from 35 investment advisors. Amazingly, a QLAC improved the probability of success in 100 percent of the scenarios we tested.1 In our earlier studies, when we used past performance of the S&P 500 and Barclay’s Aggregate Bond Index, QLACs improved the probability of success in 95 percent of scenarios. Regardless of projected or past performance, the placement of a QLAC has proven to be a great enhancement in nearly every asset allocation plan. 


  • Younger, more conservative clients benefit the most. In our analysis, the largest improvements have been in younger and more conservative client scenarios. We see significant improvements when a QLAC is placed at age 55 or 60 with an asset allocation of conservative and moderate-conservative. Too often, we look at QLACs as a tool to simply push RMDs down the road. But guaranteed income, i.e., not running out of money in retirement, is the bigger story. We often overlook the benefits of guaranteed income in portfolios and this study proves the positive impact.


  • Guaranteed income changes the conversation. If you’re not already looking at the value of QLACs – or other guaranteed income products – then you’re doing yourself a disservice. With our JourneyGuide™  software, we’ve discovered that guaranteed income not only changes the mathematical outcome of retirement, but it also changes your client relationships. With a tool like JourneyGuide, you can have meaningful, interactive planning sessions to show clients the positive impacts that small changes can have on their portfolios. In many instances, the implementation of guaranteed income allows the client to be more aggressive with their other assets. This adds advisor gamma to the relationship that would otherwise be lost. 


Winning Strategy

The hidden value of QLACs is guaranteed income. We’ve proven that regardless of allocation, the impact of guaranteed income is significant – even more so with younger investors. I encourage everyone to look at your younger clients and begin placing guaranteed future income in their portfolios. That will, in turn, allow you to have a conversation around their remaining assets or capture more assets and invest them more aggressively to maximize long-term growth potential. 

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 


1Ash Brokerage, “2018 Study: QLACS Improve Probability of Retirement Success,” March 2018:

QLAC Qualified Longevity Annuity Contract Retirement JourneyGuide

QLACs: The Unused Gift


In 2014, the U.S. Treasury Department released new rules around Qualified Longevity Annuity Contracts or QLACs. After an initial increase in utilization, the focus and attention dwindled over the past two years. Today, the sale of all deferred income annuities remains stagnant and far below expectations from 2014. This gift that the government provided remains largely unused in the planning community. 


As I prepared for a presentation recently, I asked our team to update our research on the use of QLACs at different ages and for different risk allocation models. The results were similar to an earlier study we did in 2015. In fact, the results from 2017 are even more convincing for the use of QLACs. Keep in mind the interest rate environment hasn’t changed significantly over the past 24 months. Yet, a fixed instrument was proven to improve the probability of success across many categories. With such a wide improvement, we owe it to our clients to consider this solution in the retirement planning process.  


A Closer Look

Our QLAC study evaluated four asset allocation models: 

  • Aggressive – 80/20 equity-bond allocation
  • Moderate-aggressive – 60/40 allocation
  • Moderate-conservative – 40/60 allocation
  • Conservative – 20/80 allocation


The initial investment started at ages 55, 60, 65 and 70. We looked at placing a $500,000 portfolio in each of the allocations. Each portfolio began a reasonable distribution of income beginning at age 70. For each allocation strategy, there was a probability of success of having $1 left in the portfolio at ages 90, 95, and 100. 


Next, we placed a QLAC at each one of those ages and allocation strategies. The annuity began paying out at age 80. With QLACs, you can tend to change income start dates five years before and after the initial requested start date – this gives the client a 10-year window if their needs change. So, there are 48 results cells between ages 55, 60, 65 and 70 in the four different allocation strategies when we look at longevity at 90, 95, and 100. In every one of those 48 cells, the study found that a QLAC improved the probability of success. What surprised me was the fact that some of the largest improvements in success rates happened when a QLAC was purchased at younger ages.  


A Change in Mindset

Too often, we think of QLACs as a way to push required minimum distributions down the road. Instead, we need to initiate a conversation about this solution in order to mitigate the risk of longevity. In doing so, we reduce some of the concerns our clients have about running out of income during their life. We clearly help some of our younger, more conservative clients in the process.  


Winning Strategy

Take the time to evaluate the use of deferred income annuities in the planning process with clients. Their best interests might be served by providing guaranteed income later in life. Our study shows that you can engage a client and have a high probability of helping them improve their retirement outcomes. 


For more information about the assumptions and results of our QLAC study, call Ash Brokerage at 800-589-3000. Ask for our annuity sales desk and tell them you want to know how you can improve the probability of success for your clients.  


About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of annuities at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.

Annuities QLAC Retirement

RMD, QLAC, IRA, DIA – What does it all mean? Action!


If your practice is anything like mine, activity is a critical component in driving revenue-generating opportunities. The IRS and U.S. Treasury put new required minimum distribution (RMD) regulations into place effective July 1, 2014, and in doing so, gave us an opportunity to increase activity that will drive sales in the fourth quarter of 2014 and into 2015.

These new regulations implement suggestions made in 2010, in response to the Obama administration’s request for information on lifetime income options. The new regulations allow an individual retirement account (IRA) owner to use a portion of their qualified money to purchase a qualified longevity annuity contract (QLAC), and have that portion exempt from RMD calculations.

A QLAC in our language is a deferred immediate annuity (DIA). It’s very important to note that a QLAC must be a DIA fixed contract issued from a carrier – no private annuities are allowed. In addition, fixed indexed annuities and variable annuities don’t meet the regulations.

Now you have a great reason to contact clients who aren’t using their RMDs and show them a way to continue to defer taxes on a portion of their qualified assets. These recent changes to IRS rules have many benefits: 

  • Your clients may defer 25% of their qualified assets, up to a maximum of $125,000
  • DIAs are the least expensive way to purchase a guaranteed future income stream, and purchasing today allows your clients to take advantage of today’s mortality credits. For example: a 70-year-old male  purchasing a $100,000 DIA from an A++ carrier today could guarantee themselves a $30,698.76 annual income beginning at age 85 (life with cash refund)
  • Income can be deferred up to age 85, and as a result, taxes are too
  • A number of death benefit options are now eligible, including return of premium


While DIAs are available today, the first QLAC-friendly contract is expected to be released at the beginning of November, with more expected to follow. Now is a great time to reach out to your clients who don’t enjoy taking RMDs – schedule a meeting to discuss this new opportunity. Activity will lead to sales, even if it doesn’t involve utilizing this concept.

Our Ash Brokerage annuity team is stacked with industry experts who are very much up to speed with these new regulations. According to LIMRA, DIAs were the fastest growing annuity segment in 2013, and they are expected to capture significantly more market share in the years ahead. We’d love to hear from you to discuss this new opportunity and be the trusted partner who helps you incorporate QLACs into your practice. Call us today – your clients are depending on you, and you can depend on us. 

QLAC Annuities DIA Deferred Immediate Annuity