Income Allocation Archives - Page 5 of 7 - Jerry Golden on Retirement

How to reduce taxable RMDs and improve your retirement income plan

September 19, 2019 By Jerry Golden in Annuity, Income Allocation, QLAC Tags: Income annuities, QLAC, retirement income, RMDs

A reporter called me to ask whether investing in a QLAC would reduce a retiree’s RMDs and the tax that must be paid on them.

The short answer is Yes.

The complete answer is, think about the QLAC decision as part of a broader consideration of your retirement finances. Properly combined with your IRA investments, it can provide steady, lifetime income and may help you to fund a legacy to your heirs.

Let’s examine how you might create a retirement income plan that balances various investment opportunities.

Here is a case study

A step-by-step guide to building your retirement income plan

August 26, 2019 By Jerry Golden in Income Allocation

For all the saving and planning you do to prepare for retirement, there remain two questions that are impossible to answer about the strength of your plan:

What will the stock market do during my retirement?
Will I outlive my savings?

A lot of planning expresses those risks like this: “Under our Monte Carlo analysis, you have a 90% chance that your money will last until age 90.” Or if you’re more sophisticated, they’ll give you a plot point like the following and then ask you to select the best set of outcomes.

There are two problems with these approaches:

5 ways to improve your investment returns in retirement

August 15, 2019 By Jerry Golden in Income Allocation Tags: Income annuities, low-fee, manage taxes, retirement savings

A recent New York Times article discussed ways to improve your retirement with investments in low-cost index funds. While it’s hard to argue against lower-cost funds for your stock market investments, particularly if they outperform higher-cost actively managed funds, the planning for earning high investment returns should start long before you choose a fund.

If you are ready to dive into more detail about how to improve your returns, keep reading. Following these steps will lead to more, and safer, income during retirement, driven in part by better investment returns.

Step 1: Read my article published by Kiplinger. Step 2: Repeat

May 28, 2019 By Jerry Golden in Income Allocation

You may have read this article in Kiplinger’s online magazine, in which I explain how to earn maximum tax advantages from your investment in income annuities. I republish it here, slightly modified.

Like most taxpayers, I am a fan of legally minimizing your income 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 intermediate-term municipal bonds and pay no taxes on interest earnings. But you would earn something like 2.5% (or $25,000 on $1 million in bonds) 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?

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.