Jerry Golden, Developer of Savings2Income, Adds Advice for a Dream Retirement

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Savings2Income (S2I) responds to a recent CNN Money article, discussing some of the finer points of retirement planning, offering suggestions drawn from S2I’s proprietary retirement planning strategy.

On March 2, after an article published in CNN Money listing “six secrets to a dream retirement,” Savings2Income responds with tips about retirement planning.

In the CNN Money article “Six Secrets to a Dream Retirement by Beth Braverman, Donna Rosato and Penelope Wang,” the authors point out that “to get the dream retirement, you need to save money and the markets need to give you a decent payback for your effort.” Gathering advice from various financial experts, the article offers several tips for smart retirement investing.

With respect to income savings, the authors state that 16.6% is the magic number, citing Wade Pfau, professor of retirement income at the American College, who has found that this would have worked in every historical market stretch going back to periods beginning in the 19th century, when invested in a diversified portfolio of stocks and bonds. The authors also point out that employer matches count toward that savings rate.

Stating that current yields for Treasury bonds and the Federal Reserve giving every indication that rates will stay low for years, the authors cite David Blanchett, head of retirement income at Morningstar Investment Management as saying “current yields are a good predictor of bond returns.” The authors go on to say that “stocks are less predictable--but risks today include a wobbly global economy and an aging population who may prefer holding bonds to stocks. The more you can save, the less you have to worry about this stuff.”

Addressing the difficulty of maxing out your 401(k), the article quotes Rick Meigs, president of 401(k), "Because of IRS rules that prevent plans from benefiting mainly higher-income workers, some plans limit the contributions you can make even more,” and recommends investing directly in a Roth or to save in a nondeductible IRA, which you can then convert to a Roth.

The authors also suggest, “Get in touch with the future you. Behavioral finance research suggests that saving is easier if you spend a moment thinking about your future self,” and added, “Look at an age-morphed photo of your face, and you are likely to put away more, says NYU researcher Hal Hershfield.”

Jerry Golden, developer of Savings2Income, responds to the article by stating, “While we agree that investors ought to take full advantage of employer matches in employer-sponsored plans, and converting to a Roth when it makes tax sense, there are other important points to note. First, typically, 50% of most investors’ financial assets are held outside a 401(k) or Rollover IRA. So, an investor needs to have a smart plan for those savings. Second, savings compound faster with lower fees and tax deferral. Third, the savings phase accounts for only about half the challenge, so, have the best plan for converting those savings to income.”

Finally, as regards financial vehicles for retirement, there are more choices than stocks and bonds. “Any plan for retirement income ought to integrate fixed payout annuities into the solution," Golden emphasized.

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 or 401(k) plan and Social Security into an integrated solution.

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