Savings2Income Comments on Recent Tax Law Changes and Retirement Income Planning

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Developer of Savings2Income Jerry Golden affirms the importance of tax strategies as part of retirement planning.

On March 30, developer of the Savings2Income planning method, Jerry Golden, comments on an article from CBS News Market Watch that discusses re-examining tax strategies in planning for retirement.

According to the March 15 CBS News Money Watch article, “Tax Changes Affect Retirement Planning,” writer Constantine Von Hoffman says that recent changes in tax law outlined in the American Tax Payer Relief Act of 2012 could mean it’s time to re-examine tax planning.

Von Hoffman says single taxpayers “with adjusted gross income over $400,000, and married taxpayers filing jointly with taxable income over $450,000 annually are in the 39.6 tax bracket”, and this could raise taxes on capital gains and qualified dividends to 20 percent. “Single workers with a taxable income of more than $250,000 and married couples with an income of more than $300,000 also can no longer itemize their deductions,” reports Von Hoffman.

Jerry Golden, developer of the Savings2Income retirement planning method, says these new laws could take some taxpayers by surprise. “Social Security, pensions and other taxable investments could contribute to the increase in taxable income after retirement,” he says.

Taxpayers in all tax brackets and advisors need to focus on maximizing after tax income or what Golden calls spendable income. The way to accomplish that is to turn conventional wisdom on its head. Instead of living off interest or dividends taxed at very high rates, the strategy should be to defer taxes on all investment earnings, and live mostly off principal.

When Golden says “live mostly off principal” he doesn’t mean in a high risk strategy but in a low risk approach by purchasing fixed payout annuities, whereby a portion of each income payment is treated as a return of principal excluded from taxation.

Golden says, “Money (whether you call it interest or principal) is fungible and so the goal is to get highest after tax return on your savings with the least amount of risk. That’s part of the ‘magic’ of the Savings2Income planning method.”

The 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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Chris Spring

John Mulqueen
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