Bohemia, NY (PRWEB) April 30, 2013
On April 30, Jerry Golden, Savings2Income developer, unveils two easy steps to maximize your in-retirement cash flow from personal savings by dramatically reducing high fees and taxes.
According to Jerry Golden, the developer of the Savings2Income planning method, the results of a new study show that by reducing fees and deferring taxes, investors with 15 years to retirement can generate additional retirement cash flow by as much as the total amount invested – the more years to retirement, the greater the increase. Even with less than 15 years to retirement, the increased cash flow is significant.
For a large part of personal retirement savings (those savings outside a 401(k) or Rollover IRA), instead of trying to simply drawdown from a pre-retirement investment plan (“Drawdown Investment Plan”), investors need a superior strategy for creating a plan for retirement income. Lower fees and deferring taxes need to be part of any Income Plan.
While fees and taxes impact any investment arrangement, they can be devastating for a retirement income program, which can last for 20, 30 or more years. Savings in fees and taxes are like additional investments made on the investor’s behalf that become available for conversion to retirement income.
Our studies show that by taking the following two easy steps, investors with 15 years to retirement can increase their after tax cash flow by as much as the total amount they invested.
1. Invest these otherwise taxable savings in a diversified investment portfolio of mutual funds in a no load and low cost variable annuity.
2. Once income starts, gradually shift assets out of the no load variable annuity into a series of fixed payout annuities providing increasing guaranteed retirement income in “stages” with a final purchase of a lifetime annuity at the investor’s designated “no worry age”.
While investors might be able to accomplish this on their own, using an advisor who can both (1) design and manage the investment portfolios, and (2) manage the gradual purchase of fixed payout annuities, is suggested. In addition, advisory fee percentages in such an Income Plan should be much lower than typical advisory fees because of the faster growth of assets, little or no tax management required, and commissions paid to the advisor on the purchase of the fixed payout annuities.
The amount of the savings in fees and taxes will depend on a number of variables - the most significant is the years to the start of income, as shown in the chart to the right.
This significant advantage the Income Plan has comes from the following sources:
1. Tax deferral on investment earnings under the no load variable annuity;
2. Lower advisory fee percentages because of simpler management and faster asset growth; and
3. Crediting rates on fixed payout annuities above the risk-adjusted yield on fixed income investments.
Besides the huge increase in after tax cash flow, other advantages of an Income Plan approach include: (a) the investor surviving thirty years after income start ends up with a substantial amount of lifetime income not present in the Drawdown Investment Plan; (b) income amounts are much more stable and predictable; and (c) the plan is much easier for the investor to understand and manage.
These results are achieved without taking greater investment risk. In fact, to match these results the Drawdown Investment Plan would have to earn an excess return that no fund or manager has consistently earned over long periods.
An innovative retirement planning method called Savings2Income (S2I) created by Jerry Golden seeks 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 and 401(k) plan, and Social Security benefits into an integrated solution.