The Simple Explanation
A DIA is like a SPIA with a delay. You pay now, but income doesn't start until a future date — often 10, 15, or 20 years later. The longer you wait, the higher the payment. DIAs guarantee income in late retirement when you're most at risk.
Example
A 60-year-old puts $100K into a DIA with income starting at 80. At 80, they might receive $2,500-$3,000+/month for life. That same $100K in a SPIA at 80 might only generate $700-$800/month. The difference: mortality credits from the deferral period.
The Longevity Insurance Concept
If you're 65 planning retirement, you don't know if you'll live to 75 or 95. A DIA lets you spend other assets more freely from 65-80, knowing the DIA kicks in at 80. You've transferred the 'what if I live to 100?' risk to the insurance company.
What Is a QLAC?
A QLAC is a DIA inside a qualified retirement account (IRA, 401k). Key benefit: money in a QLAC is excluded from RMD calculations until income starts. Current limit: $200K. Income must start by 85.
When DIAs Make Sense
• Worried about running out of money in late retirement
• Have enough other assets for deferral period
• Want most income per dollar for late retirement
• Want to simplify late-life planning