QLAC Retirement Income Calculator
Estimate the guaranteed lifetime income you can generate from a Qualified Longevity Annuity Contract (QLAC) based on your investment, age, and deferral period.
What Is a Qualified Longevity Annuity Contract (QLAC)?
A Qualified Longevity Annuity Contract is a specific type of deferred annuity bought inside an IRA or 401(k). It matters because it provides a paycheck you can't outlive and lowers your RMD starting at age 73. You must start taking income by age 85.
Key Factors That Determine Your QLAC Payout
Premium (Investment)
The lump sum used to buy the contract (Max $225k).
Deferral Period
How long you wait. Longer wait = higher monthly check.
Gender
Women generally receive slightly lower payments due to longer life expectancy.
Interest Rates
Higher rates during deferral significantly increase the final payout.
How We Estimate Your QLAC Income
Monthly Payment = Accumulated Value / Annuity Factor
The Two Phases:
- Deferral: Your premium grows tax-deferred until the start age.
- Payout: The fund is amortized over your remaining life expectancy.
Actual carrier quotes may vary based on specific expense loads and mortality tables used.
How to Use the QLAC Calculator
- Enter the amount you plan to invest (up to the $225,000 IRS limit).
- Input your current age and gender.
- Select when you want payments to begin (between ages 75 and 85).
- Adjust the interest rate slider to see best/worst case scenarios.
- Tip: Use the "Presets" to see how investing at different ages affects your outcome.
Interpreting Your QLAC Income Results
Monthly Payout Estimates
- $500 - $1,000: Supplemental income. Good for covering basic utilities.
- $1,000 - $2,500: Significant coverage. Can cover housing costs or property taxes.
- $2,500+: High coverage. Can replace a large portion of pre-retirement income needs.
The "RMD Shield" Effect
The money used to buy the QLAC is exempt from RMD calculations until payments start. This can lower your taxable income in your 70s. Compare this guaranteed income to Social Security or pension gaps to see your true coverage.
QLAC vs. Other Retirement Income Sources
| Feature | QLAC | SPIA (Immediate Annuity) | Bond Ladder |
|---|---|---|---|
| Start Time | Deferred (Ages 75-85) | Immediate | Immediate |
| Longevity Protection | High | High | None |
| RMD Impact | Exempt (until 85) | Taxable | Taxable |
Why Your Payout Estimates May Change
- Interest Rate Environment: If rates rise between now and when you buy, your payout will be higher. This calculator uses a fixed estimate; real rates float.
- Health Status: QLACs use standard (average) mortality tables. If you are in excellent health (family history of longevity), a QLAC is an even better deal because you are likely to outlive the average.
- Inflation: Standard QLACs do not adjust for inflation. The $1,000 you get at 85 will buy less than it does today.
Strategic Uses for a QLAC
Case 1: RMD Reduction
A high-balance IRA holder (e.g., $2M) invests $200k into a QLAC. Their RMD base drops to $1.8M, significantly lowering annual taxable income and Medicare Part B surcharges.
Case 2: The "Floor" Strategy
Using the QLAC payout to cover essential fixed costs (food/housing) at age 85, while withdrawing from stocks for discretionary spending earlier in retirement.
Limitations of QLACs
- Loss of Liquidity: Once you fund a QLAC, you generally cannot get the lump sum back. It is illiquid.
- No Inflation Adjustment (usually): Unless you buy a rider (which lowers the starting payout), your income is fixed in nominal dollars.
- Not a Complete Solution: A QLAC caps at $225k (indexed). It cannot solve all income gaps for very high spenders.
- Accuracy Note: This calculator is an educational proxy, not a binding insurance quote.
Frequently Asked Questions About QLACs
References & Authorities
About the Author
Nithya Madhavan
Web developer and data researcher creating accurate, easy-to-use calculators across health, finance, education, and construction and more. Works with subject-matter experts to ensure formulas meet trusted standards like WHO, NIH, and ISO.