You might think I sound presumptuous when I say that a new era in retirement planning has begun.
But I plan to prove it to you.
An innovative difference
A new retirement planning method demonstrates that by properly allocating the smartest sources of income, you can create more income with less market risk — for the rest of your life. And you can do most of the research on your own.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Retirees and people planning for retirement can follow any number of paths. Most consider — or have been offered — only a fraction of them. Online tools, investment advisers and financial planners supply limited options.
Why? The biggest problem is that most retirement advice favors an allocation of assets — stocks, bonds and cash, paired with an algorithm for withdrawals — designed to make the money lasts as long as the retiree.
Most tools — such as the popular Monte Carlo Analysis — can handle only a few of these asset allocation strategies, thus ignoring major categories of financial vehicles and leaving retirees with market risks. Advisers often guide customers to products that they are already selling. And many are not educated on all the ways retirees can create income security.
When you instead build your retirement on the allocation of income among dividends, interest, annuity payments and withdrawals, you can achieve both higher and safer income. I call it the Income Allocation Planning (IAP) method, and it’s available as a free, no-obligation service at Go2Income.com.
How Is Income Allocation different from Asset Allocation?
The twin goals of the IAP method are to increase the amount of after-tax (spendable) income and to reduce income volatility (for more dependability). IAP differs from traditional retirement planning in three ways:
Step 1 uses annuity payments to provide guaranteed lifetime income. Advisers often ignore annuity payments as an option.
Step 2 treats rollover IRAs differently than personal (after-tax) savings accounts for optimal tax efficiency. Most calculators have a single investment allocation.
Step 3 manages withdrawals from rollover IRAs. Most advisers suggest retirees just withdraw IRS mandated required minimum distributions from IRAs.
How much more income will Income Allocation generate?
Go2Income’s Income Allocation tool enables the visitor to the site to create a customized plan on their own. (And makes available specially trained Go2Specialists to review the plan designed from the tool.)
Set out below is a sample chart from the Go2Income site for a woman age 65 with a total of $2 million in savings (half of which is in a rollover IRA). Based on the assumptions listed underneath the chart and those provided in a detailed report the visitor can order, the income advantage vs. an Asset Allocation strategy is over $11,000 in the first year and over $850,000 cumulatively through age 95.
Here are the key underlying assumptions:
- Stock market return after fees: 6%
- Fixed income return after fees: 3%
- Annuity purchase rates: proprietary Go2Income methodology
- Asset allocation: 50% to equities; IRA withdrawals to 95
The right combination of DIY and specialists
Too many people feel they can’t make their own decisions about retirement. That’s partly because they don’t have all the information they need. It’s also because they haven’t educated themselves.
Now, instead of relying exclusively on your financial adviser to direct your retirement plans, the Income Allocation tool enables you to adjust inputs and create your own retirement income plan. It gives you solid information — and a range of potential solutions — that you can bring to your adviser for discussion.
Go2Income has specialists who can talk to you about the results you get from our tool, but they aren’t the only advisers you should consider. I urge you to examine all your options. Try out other tools and compare the results. Talk to a number of advisers before you choose one to guide you.
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears EbbConstructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility BillsIf passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
Eight Estate Planning Steps to Protect Your Loved Ones (and Your Legacy)Two-thirds of Americans don't have an estate plan. If you're one of them, these are the essential steps to take now to prevent problems for your family later.
-
The Six Pros This Adviser Says You Need to Sell Your BusinessSelling your business isn't as simple as getting the best price and walking away. These are the six professionals you'll need to get a deal across the finish line.
-
The Three C's to Financial Success: A Financial Planner's Guide to Build WealthConsistency, commitment and confidence in your chosen strategy are more critical to your financial success than finding the 'perfect' financial plan.
-
A Financial Adviser's Guide to Solving Your Retirement Puzzle: Five Key PiecesIf retirement's a puzzle you're struggling with, try answering these five questions. The answers will guide you toward a solution.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
