tax planning Archives - Jerry Golden on Retirement

Keeping up-to-date on your income annuity quotes

September 26, 2018 By Jerry Golden in Annuity Tags: Keep quote up-to-date, retirement income, tax planning

A lot of visitors come to Go2Income.com or other income annuity sites to find out how much income they can generate from a specific amount of retirement savings. The quote they receive can be for an immediate annuity, deferred income annuity (DIA), or QLAC (a special form of DIA) purchased out of a rollover IRA account.

Visitors may be considering a new plan for retirement income, or they may be curious about how their savings translate into lifetime, guaranteed monthly income. Or perhaps they’d like to compare a quote to an annuity option out of their 401(k) plan or fixed income strategy they received from an advisor.

For a solid retirement, look back from the future – Part II

January 24, 2017 By Jerry Golden in Annuity, Two-stage retirement Tags: Annuities, Guaranteed Income, personal savings, retirement income, Social Security, tax planning

To paraphrase Marty McFly, who time-traveled between the 1950s and the 21^st century in a souped-up Delorean sports car, the key to a successful retirement is to plan “back from the future.”

Actually, Marty didn’t concern himself with retirement. But imagine how the rest of us could improve our retirement planning if we had a glimpse of what will really happen 20 or 30 years from now. We would know exactly how to invest our savings, what the cost of living or market returns will be, and what happens to our health, our kids and grandkids.

Alas, to quote another great mind, physicist and philosopher Niels Bohr, who won a Nobel Prize, “Forecasting is particularly difficult, especially concerning the future.”

That leaves us only with planning from the present.

Even as we all hope to live long and healthy lives, you’ll be a better planner if you anticipate what might go wrong in retirement. I said in the first part of this blog that I would tell you how and when to plan for the basic retirement objectives that will bring a bright retirement future. I call them the Three Ls: lifetime income, liquidity and legacy.

Stage I of retirement and Stage II

Defuse the tax bomb that threatens retirement

October 25, 2016 By Jerry Golden in Annuity 2 Comments Tags: Annuities, IRA, retirement income, tax planning

It makes sense that everyone’s retirement plans should be different and adjusted to personal circumstances. If you have lots of children and have already paid for several college bills, for instance, you might have less home equity than your neighbors. If you have built up large stock holdings, you will be thinking about how to manage market risk.

A constant for every portfolio, though, is taxes.

If a portion of your earnings was set aside in your 401(k) or IRA, that doesn’t mean taxes were forgiven — they were only deferred. And if the investment earnings on these savings or in deferred annuities were not taxed currently, you will still owe money to the IRS at some point in the future. Lastly, if you’ve got appreciated securities in your personal savings, you’ll owe taxes when you sell them.

I call it the “tax bomb.” More

Why Traditional Retirement Is Not Necessarily Dead

February 28, 2013 By Jerry Golden in Interesting Articles Tags: retirement income, savings, Savings2Income, tax planning

According to the Feb. 4 CBS Money Watch article titled “Why Traditional Retirement Is Dead“, traditional retirement plans are irrelevant. Writer Steve Vernon said that unfortunately people are no longer able to retire in their sixties due to lack of income from debt, decreases in Social Security benefits and medical bills.

Sure, “traditional” retirement is “dead”, but only in the sense that “each generation creates its own definition of security”, as a colleague of mine once said. Getting the gold watch at the company lunch, and then retiring to a warmer climate to play golf or whatever, with the security of lifetime benefits from the company pension plan and Social Security, along with personal retirement savings that hopefully fill in the rest may no longer be the norm. While today’s and tomorrow’s retirees may have more lifestyle choices, they also have to do a better job of “to and through” retirement planning.

The article lists medical expenses as one of the main costs during retirement, and that approximately 50 percent of retirees said they stopped working due to medical issues or disabilities. Vernon noted that a 65-year-old couple would need $240,000 in the bank to pay for health expenses during retirement, according to a report from Fidelity Investments.

While health expenses are one of the main expenses retirees have to worry about when entering retirement, the key to a successful retirement is to do the best job possible in generating the largest amount of dependable, spendable income from all of your retirement savings. While you don’t control markets you do control a number of factors, such as (i) making smart Social Security claiming decisions; (ii) lowering fees and deferring taxes on all of your personal savings; and (iii) purchasing guaranteed income. The “purchasing guaranteed income” is the important part, and done properly could in some ways replicate the “traditional” employer pension plan’s income for life as your own “personal pension plan.”

That’s why we have developed a retirement planning method called Savings2Income (S2I) – to provide a clear path to retirement security for those saving for retirement, soon to retire, and recently retired. S2I incorporates Rollover IRA savings, personal retirement savings held outside an IRA or 401(k) plan and Social Security into an integrated solution to provide results in total similar to what a “traditional” plan typically provided.

As Mark Twain is reported to have cabled from London after his obit was published, “The reports of my death greatly exaggerated.” The same could be said for “traditional retirement”.

Blog re: End of Year Tax Planning – Yes, Again!

August 22, 2012 By Jerry Golden in Interesting Articles Tags: Dependable spendable income, retirement income, retirement savings, tax planning

Over the next few months, I’m sure you’ll see a lot of stories regarding year-end tax planning. (Here’s a link to a typical story: “What Some Investors Are Doing to Anticipate a Tax Increase” by Paul Sullivan). This year, these stories should be more numerous, mainly because of the uncertainty surrounding the so-called Bush tax cuts. Unfortunately, most of the advice reported on is likely to be based on a flawed approach: they’re likely to ignore the purpose for which these taxable investments are being held, e.g., supplemental retirement savings; part of wealth transfer program; college education fund; or short term expenditures such as a wedding, home renovation, travel plans, etc.

Each broad category of savings should have its own unique strategy in the current economic environment.

Let me deal with one I’m most familiar with – supplemental retirement savings. As the founder of the Savings2Income (S2I) planning method and sponsor of the www.Savings2Income.com website, my team and I studied this area considerably to develop what we consider the best approach to saving and investing for retirement.

While S2I is primarily focused on the middle market and mass affluent investor, the strategy works for HNW investors as well. Here’s how both types of investors ought to apply the strategy as part of their 2012 year-end tax planning, as well as longer term retirement planning.

Assuming you’ve identified a portion of your non-qualified financial assets (which excludes IRAs and 401(k) plans) that are long term and needed to generate retirement income, the year-end strategy is quite clear and simple if the Bush tax cuts expire for you:

Sell a portion of these taxable investments, realize any capital gains in 2012 at the lower capital gains tax rate, and establish a new cost basis for these net assets.
Invest these net proceeds into a no load Variable Annuity to be used as a future source of your retirement income.

If you follow the S2I planning method for converting savings to income, this strategy can produce a dramatic increase in after tax retirement income derived mainly from lower fees and tax deferral.

Almost as important, you’ll be able to tune out on all tax and investment timing discussions on this important part of your savings. And, you’ll only pay taxes on what you withdraw (even then, some of what you withdraw is considered a return of principal, not income) and not on what you earn each year on this part of your savings.

Even if the Bush tax cuts don’t expire and/or are continued for you, it is still a good strategy to consider.

Jerry Golden Founder of www.Savings2Income.com and CEO of GoldenRetirement.com
convert your retirement savings into dependable, spendable income