Savings2Income Releases a Statement Regarding Cost of Living Adjustments Affecting Retirement Savings Plans

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Following the recent news of the cost of living adjustments affecting retirement savings, Savings2Income releases a statement.

On November 30, 2012, Savings2Income released a statement in regards to an Asset International article regarding the IRS announcing cost of living adjustments that affect pension plans and other retirement savings plans.

According to the Asset International article, “The Internal Revenue Service (IRS) announced cost of living adjustments (COLAs) affecting dollar limitations for pension plans and other retirement-related items for tax year 2013.” The article states that the elective deferral limit for people participating in a 401(k) and the Federal Government’s Thrift Savings Plans has increased $500 from $17,000 to $17,500, and the catch-up contribution limit for people 50 and over sees no change and remains at $5,500.

The article mentions that Section 415 of the Internal Revenue Code affects the dollar limitations on benefits for retirement savings plans. According to the article, “The limitations that are adjusted by reference to Section 415(d) generally will change for 2013 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.”

Savings2Income released a statement with their views on cost of living adjustments generally and their effect on retirement savings and planning for retirement..

Most investors believe they need to invest their Rollover/401(k) and personal retirement savings such that the retirement income their savings produces keeps pace with inflation. That’s a tricky proposition because it depends on whether you’re saving for, transitioning to, or already in retirement.

An investor can invest in TIPS bonds or COLA annuities that grow directly with inflation, or in a portfolio of securities that over long periods hopefully keeps pace with inflation.

For average investors, the S2I approach to protecting retirement income from the impact of inflation is a little different as follows:

1.    Maximize Social Security benefits which is the best source of COLA protected Income.

2.    Convert your Rollover IRA/401(k) savings to a level or COLA protected lifetime income stream.

3.    Use Personal Retirement Savings to be the X-factor and to create income streams that more importantly reflect your personal income needs which may or may not follow COLA.

Golden Retirement LLC was founded by Jerry Golden to create innovative financial products and services focused on the wealth accumulation and retirement income needs of broad segments of the U.S. population. The company has sponsored the Savings2Income website and is launching its own registered investment advisor, Golden Retirement Advisors.


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Chris Spring

John Mulqueen
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