Retirement Planning Reinvented
To help maximize your income and reduce your risk, try building your retirement on the allocation of income among dividends, interest, annuity payments and withdrawals.
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.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Jerry Golden is the founder and CEO of Golden Retirement Advisors Inc. He specializes in helping consumers create retirement plans that provide income that cannot be outlived. Find out more at Go2income.com, where consumers can explore all types of income annuity options, anonymously and at no cost.
-
How to Help Your Kids Without Ruining Your Retirement
Here are some general considerations to ensure the gift of assets to your kids will not negatively affect your financial future.
By Mario Hernandez Published
-
AI to Power the Next Generation of Robots
The Kiplinger Letter There's increasing buzz that the tech behind ChatGPT will make future industrial and humanoid robots far more capable.
By John Miley Published
-
How Annuities Can Help You Retire Early and Delay Social Security
Waiting until 70 to claim Social Security benefits can pay off, so how do you bridge the gap between giving up your paycheck and filing for benefits?
By Ken Nuss Published
-
How to Get Your Kids to Step Off the Gravy Train
A surprising number of young adults live with their parents. Setting some financial ground rules could get the kids out on their own faster.
By Neale Godfrey, Financial Literacy Expert Published
-
Spring Is a Good Time to Clean Up Your Finances, Too
While you’re decluttering your home for spring, consider also taking a crack at cleaning up your finances and old paperwork.
By Tony Drake, CFP®, Investment Advisor Representative Published
-
Is Your Retirement Solution Hiding in Plain Sight?
Here’s how to use your home equity in combination with an annuity contract to produce late-in-life income.
By Jerry Golden, Investment Adviser Representative Published
-
How to Choose Your Trustee or Executor of Your Will
Above all, you should choose someone you trust, keeping in mind that acting as a trustee or executor can be a complex, thankless and sometimes long-term job.
By John M. Goralka Published
-
Three Steps for Women to Take Control of Their Finances
These strategies are especially for women who are new to managing their money because of divorce or the death of a spouse.
By Emily Glassman Published
-
How AI Can Help Take the Emotion Out of Investor Decisions
AI-driven recommendations can complement human judgment, leading to more rational choices that aren’t as influenced by biases and blind spots.
By Francis Geeseok Oh Published
-
Can You 1031 Exchange into a REIT?
No, you can't, but two other REIT-like alternatives let you defer capital gains taxes while giving you exposure to institutional-quality real estate assets.
By Daniel Goodwin Published