Jerry Golden on Retirement

From Jerry’s Desk:

May 3, 2019 By Jerry Golden in Annuity Tags: Annuities, From Jerry's Desk, retirement income

How I Designed My Own Retirement Plan

I have lots of experience in the insurance and retirement industries. While the knowledge gained in those experiences enables me to offer Go2Income’s unique retirement income planning solutions, it’s one thing to espouse a point of view, and quite another to put it into practice. With success.

In this new monthly series, From Jerry’s Desk, I will share my personal experience and the strategies (but not my personal numbers) that I have implemented for myself and my family.

Securing income first is a philosophical – not numerical – approach

“Income first” has allowed me to “retire” from corporate life and start a new business – Go2Income – with the hope of helping others secure the retirement they want, from travelling to finding the perfect lifestyle and even being an entrepreneur.

I recognized that this Go2Income business would not make money right away. So I needed the income from my financial assets (my only real estate holdings are for personal use) to cover my expenses – without additional risk.

Secure income facilitates your goals and aspirations. And that’s why it comes first.

Only when I was certain that my retirement income was solid could I make plans for my new business. And just as in business planning, I created a retirement plan that looked to the future and guided my decisions about the present. I’ve described to people that my business is the “micro-cap” part of my investment portfolio – no immediate cash flow but lots of upside. So, at the same time I was creating a business plan, I was creating a retirement income plan.

Applying Classic Planning to My Personal Retirement Plan

I was taught that every plan (business or personal) ought to have a mission, objectives, strategy and tactics.

Mission

To create a secure retirement for my wife and me, and leave a reasonable legacy for my heirs.

Objectives

To create secure steams of income that are independent of market results. And to push market risk and market growth to the kids and grandkids.

Strategy

Create enough secure income from dividends and interest, as well as annuity payments, to cover a generous budget. Minimize withdrawals of capital that are subject to market results and the highest tax bills.

Tactics

From a tactical standpoint, work with my investment advisors to create a diversified high dividend portfolio and a municipal bond portfolio. Add higher-yielding taxable securities, if necessary, to deliver the desired cash flow. Convert the portion of remaining savings to annuity payments for both me and my wife to meet our goals.

More personal considerations

We didn’t want to be dependent on our kids late in retirement
We want to deliver a legacy to them as efficiently as possible.
We want to maximize the after-tax spendable income.
We don’t want to compromise on our living space or location.

Why I think what I think

I’m a baby Boomer, and this is information I have developed to prepare my retirement plan. I’ve done the classroom learning; I have also lived it, not speculated about it There are other approaches to planning your retirement– asset allocation is popular with financial advisors — but my gut is that if you don’t prioritize your income, your retirement won’t be as effective. This may be self-serving but as someone with years of experience, I can’t tell you off the top of my head what $1 million of savings will produce, unless I detail the income. So neither you nor your advisor can.

In future articles of this series, I will discuss more specifics about building income and legacy.

In the meantime, if you have questions about your retirement, submit them to me, and I will get back with specific answers.

Five ways to increase your after-tax income and legacy (And plan ahead for April 15, 2020)

April 8, 2019 By Jerry Golden in Income Allocation

Over dinner with friends who live in the Northeast, they expressed concern about how the recent tax changes may increase their federal income taxes. They’re right to worry. New rules limit the amount of property and state income taxes that can be deducted – and they live in a high-tax state.

Like everyone, I am a fan of legally minimizing your taxes. But I think – if you are retired or about to retire – you should concentrate less on minimizing taxes and more about increasing after-tax spendable income and your financial legacy to heirs. Sounds like a non-sequitur, but it isn’t.

As an example, you could invest your entire savings in high-quality municipal bonds and pay no taxes on interest earnings. But you would earn something like 2.5% in annual income. Wouldn’t it be an improvement if you paid some taxes and generated an income stream equal to, say, 6% after taxes.

Make retirement simpler: From target date funds to income allocation plan

March 4, 2019 By Jerry Golden in Income Allocation

The financial industry figured out how to improve saving before retirement, and 401(k) investors are taking advantage.

The idea is simple: create an investment choice that allows you to “set it and forget it” until you retire. These options available in a 401(k) plan are called target date funds (TDF). If you elect a TDF when you’re young, the fund automatically recalibrates as you age, becoming more conservative as you near retirement. In that way, the fund captures growth and is less likely to experience severe setbacks from market downturns as you approach retirement.

An article in the San Francisco Chronicle says Vanguard reported that just over half of participants in the 401(k) plans it administers are invested in a single target date fund. These funds account for one-third of the assets in all 401(k) and other defined contribution plans run by Vanguard.

Retirement Planning Reinvented

February 28, 2019 By Jerry Golden in Income Allocation Tags: Income allocation, Jerry Golden, retirement income

You might think I sound presumptuous when I say that a new era in retirement planning has begun.

But I plan to prove it to you.

An innovative difference

A new retirement planning method, available here, demonstrates that by properly allocating the smartest sources of income, you can create more income, with less market risk — for the rest of your life. And you can do most of the research without an advisor.

Retirees and people planning for retirement can follow any number of paths. Most consider – or have been offered – only a fraction of them. Online tools, investment advisors and financial planners supply limited options.

Why? The biggest problem is that most retirement advice is geared toward asset allocation. Most tools can handle only a few strategies based on the allocation of assets, thus ignoring major categories of financial vehicles and leaving retirees with market risks. Advisors often guide customers to products that they are already selling. And many are not educated on all the ways retirees can create income security.

When you instead build your retirement on a foundation of income allocation, a new world opens up.

Sources of income create income security

For most Boomers, the greatest fear in retirement is running out of money. Income Allocation logically focuses on allocations of income among dividends, interest, annuity payments and withdrawals (early in retirement) and between Rollover IRA and taxable accounts (for tax efficiency). The result is lifetime income, and more of it, and actually more liquidity. In the long run, you will also increase the financial legacy you can leave as well.

Are Income Annuities fair? Or do annuity payments improve your retirement income plan?

February 20, 2019 By Jerry Golden in Annuity, Income Allocation Tags: Income allocation, Income annuities, retirement income

analyzing annuity payments in retirement

If you get a chance, you might read this article “Why Retirees May be Wary of Annuities”. Written by two knowledgeable academics and based on a study of consumers, the authors concluded that the aversion to income annuities may be related to a question of fairness, i.e., insurance company holds on to part of the annuity reserve at the death of the annuitant.

At the end of the article, the authors suggest that what’s needed for annuity acceptance is a “highly personalized approach, in which the [planning] solutions are tailored to reflect the goals, circumstances of the individual.” That’s what we’re trying to do with our new Income Allocation Tool.