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Fewer and fewer of us have company pensions these days. Half of Americans retire on Social Security alone. But Social Security retirement benefits are to be cut to 87% in 2031.

Where will the other 13% come from?

Social Security retirement benefits function like a lifetime annuity: they pay a set amount every month for life (somewhat adjusted for changes in the cost of living.)

Alternatives When Social Security Benefits are Cut

Some of us may be young(ish) and employable in 2031.

Some of us may have savings or IRAs to draw from.

Some of us may have 401(k)s. Those who do might be viewed as lucky ducks.

Are you a lucky duck with a 401(k)?


Qualified Lifetime Annuity Contract (“QLAC”)

A Qualified Lifetime Annuity Contract (“QLAC”) allows the owner of a 401(k) to take the lesser of $125,000 or 20% of his 401(k) and convert it to a lifetime annuity. Whether this is financially a better deal than just drawing down the 401(k) depends on the terms. The advantage for some people is that, just like Social Security, this is a lifetime annuity. (Unlike Social Security it has no adjustment for changes in the cost of living.)



Estate Planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

She assists families of people with special needs, people planning for the retirement years and people administering estates.





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