# Fixed Income Annuity **URL:** \ **Category:** Investing\ **Created:** [February 29, 2024, 11:55pm UTC](https://community.clark.com/t/fixed-income-annuity/4545 "2024-02-29T23:55:39Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![FerrariClunker](https://avatars.discourse-cdn.com/v4/letter/f/bc8723/32.png) [@FerrariClunker](https://community.clark.com/u/FerrariClunker)\ **Post date:** [February 29, 2024, 11:55pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/1 "2024-02-29T23:55:39Z")
Has anyone here bought a FIA (Fixed Income Annuity)? The return of FIA is not great, but for people who are close to retire, it could be a part of the Roth IRA portfolio to protect your principle. I’m interested in hearing your experiences. ---
**Author:** ![butler](https://avatars.discourse-cdn.com/v4/letter/b/ac91a4/32.png) [@butler](https://community.clark.com/u/butler)\ **Post date:** [March 1, 2024, 2:43pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/2 "2024-03-01T14:43:42Z")
You want to buy a tax-deferred product inside a tax-sheltered account ? ---
**Author:** ![FerrariClunker](https://avatars.discourse-cdn.com/v4/letter/f/bc8723/32.png) [@FerrariClunker](https://community.clark.com/u/FerrariClunker)\ **Post date:** [March 1, 2024, 4:34pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/3 "2024-03-01T16:34:04Z")
No, not a tax-deferred product. ---
**Author:** ![butler](https://avatars.discourse-cdn.com/v4/letter/b/ac91a4/32.png) [@butler](https://community.clark.com/u/butler)\ **Post date:** [March 2, 2024, 1:23am UTC](https://community.clark.com/t/fixed-income-annuity/4545/4 "2024-03-02T01:23:32Z")
Personally I would never mix investing and an insurance product. Whats your time horizon for your Roth ? ---
**Author:** ![FerrariClunker](https://avatars.discourse-cdn.com/v4/letter/f/bc8723/32.png) [@FerrariClunker](https://community.clark.com/u/FerrariClunker)\ **Post date:** [March 2, 2024, 5:51pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/5 "2024-03-02T17:51:33Z")
10 years to retirement, maybe. This is primary for principal protection, not investment. Bonds is not great to protect the principal. ---
**Author:** ![ochotona](https://sea2.discourse-cdn.com/flex016/user_avatar/community.clark.com/ochotona/32/293_2.png) [@ochotona](https://community.clark.com/u/ochotona)\ **Post date:** [March 2, 2024, 8:25pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/6 "2024-03-02T20:25:03Z")
Hi Ferrari, I bought a QLAC last summer, [here is the original discussion thread](https://community.clark.com/t/qualified-longevity-annuity-contract-qlac/3233). I spend $200,000 out of my tax-deferred IRA (I’m 62, the youngest age allowed to buy a QLAC), **no tax impact in 2023** , and at age 82 it pays me $73,622 per year until I die. Of course, NY Life and I are placing opposing bets on how long I will live. In the aggregate, the always win… they’re the house after all, right? But individuals may win if they have longer than average lifespans. The exact problem I was trying to solve was the following: 1. I can’t add any more benefit to my LTC policy which pays max $500,000 over my lifetime, they won’t let me, and anyway I hate paying for something I might get priced out of or not use, and yet I’m sensing that inflation is going to rip $500,000 apart pretty quickly over the rest of my life (3% inflation over 30 years turns $500k into $200k) 2. The QLAC gives me 100% certainty of a large “pulse” of cash late in life, and I don’t have to make any claims, meet any conditions, it’s not conditional on the stock market, or my investment savvy, and I make no further payments. THERE IS NOTHING I CAN DO TO STOP THIS MONEY FROM COMING. They have my checking account info, starting on my 82nd birthday there will be monthly deposits of $6135. 3. If I die, my heirs get my initial $200,000 back, guaranteed 4. Using the QLAC pushes some of my RMD into the future - I have a large IRA, and I have a looming RMD problem, don’t get me wrong, it’s a great problem to have, but I have to engineer around it nonetheless or else I am going to get hit on the head I am very satisfied with the purchase. I bought it from one of Clark’s favorite children - Fidelity. People have raised the concern - “you could do better in the stock market”. That’s a false equivalency. You cannot compare basically risk-free cash flows with stock market returns. QLAC has to be compared to Treasuries or AAA or AA rated investment grade bonds. If I live as long as I think I will live (based on family history) the QLAC beats any bond I could ever possibly buy by miles and miles. It’s a bond replacement that I cannot outlive - and I still take large bets in the stock market with the rest of my portfolio. So I get these nice non-correlated returns. QLAC is like a self-funded private pension for old people. Nothing bad about that. ---
**Author:** ![butler](https://avatars.discourse-cdn.com/v4/letter/b/ac91a4/32.png) [@butler](https://community.clark.com/u/butler)\ **Post date:** [March 2, 2024, 10:01pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/7 "2024-03-02T22:01:44Z")
> [@ochotona](#): > > People have raised the concern - “you could do better in the stock market”. That’s a false equivalency. You cannot compare basically risk-free cash flows with stock market returns. QLAC has to be compared to Treasuries or AAA or AA rated investment grade bonds. If I live as long as I think I will live (based on family history) the QLAC beats any bond I could ever possibly buy by miles and miles. I actually have your original post saved in a document for later in life. Lets run some rough numbers to see how the stock market might compare. If we use a 10% rate of return over the next 20 years, your $200k would compound to $1.35M. Lets ignore dividends along the way for simplicity. If we then use $73k in annual dividends that would equate to a 5.4% dividend from your $1.35M principal. So with some “back of the napkin” calculations…it doesn’t seem like a bad choice. I don’t know how to adjust for risk…but I imagine that would make it appear better… Are your annual payouts starting at 82 indexed for inflation? Or is it the same amount every year ? ---
**Author:** ![ochotona](https://sea2.discourse-cdn.com/flex016/user_avatar/community.clark.com/ochotona/32/293_2.png) [@ochotona](https://community.clark.com/u/ochotona)\ **Post date:** [March 2, 2024, 10:12pm UTC](https://community.clark.com/t/fixed-income-annuity/4545/8 "2024-03-02T22:12:03Z")
Not indexed to inflation. Back in the original post, I mention that I ran the IRR calculation on the cash flows, and they were 6.51%, now if risk-free long-term US Treasuries ever rise above 6.51% then maybe it wasn’t a good choice… but, I can outlive a pile of US Treasuries. I can’t outlive a fixed annuity. And it wasn’t a huge part of my portfolio. My portfolio has about “healed” from that withdrawal already. Here’s what I do - I don’t include QLAC income in my retirement planning. I pretend it doesn’t exist. I’m not pre-spending it. I want it to be like a LTC policy about the time most people need LTC. That’s why I chose 82.