How to Cut Your Taxes as Short-Term Interest Rates Come Down

Using after-tax savings to buy an immediate annuity could shift your taxes on income to later years, when you might have expenses that can offset higher taxes.

An older woman looks at paperwork with her laptop on her lap while she sits in a big chair.
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If interest rates come down, according to our fixed income investment guru, “the reductions will likely be at the short end of the yield curve with rates holding steady at the longer end.” Or in layman’s terms, if we move to a more typical yield curve, you’ll see rates on long-term bonds (underlying annuity rates) be substantially higher than on short-term securities and CDs. That may also mean that rates on new annuity contracts are holding steady — although maybe not for long.

For our typical investor, Sally, who is 70, her lifetime income from a $500,000 investment sits at about $42,000 per year, or 8.4%, which means nearly double the current short-term rate of, say, 4.25%. But do you give that advantage away in taxes? That answer and more below.

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Jerry Golden, Investment Adviser Representative
President, Golden Retirement Advisors Inc.

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, where consumers can explore all types of income annuity options, anonymously and at no cost.