Jerry Golden

Don’t Move to Another State Just to Reduce Your Taxes

No comments

By Jerry Golden

We know lots of friends who are considering moving from a high-tax state, such as New York, to a state with low or no state income taxes. They think they will end up with more money, although they are torn because they may also be moving away from family and friends just to escape state taxes.

What I advise them to do is think about spendable income — the amount they’ll have to spend after taxes — and not just low or zero tax rates. If you have more money to spend after paying the tax bill wherever you currently live, you might as well stay where you are, if it’s closer to the grandkids. You may be able to pay for at least one warm-weather winter trip, too.

Design a Smarter Retirement Income Plan

Before making life decisions about moving (or downsizing, purchasing insurance, etc.) retirees ought to know their number for their total starting income, and have a plan for retirement income that includes a projection of income and savings, and all planning assumptions.

The income plan ought to cover:

  • Starting income
  • Inflation protection
  • Beneficiary income protection
  • Spousal income (if applicable)
  • Plan management (when plan assumptions are not realized)
  • Market risk to plan (when markets fluctuate)
  • Legacy passed on to beneficiaries or heirs

All these subjects are covered in articles on Kiplinger.com. In one article, How to Generate an Extra $20,000 a Year in Retirement, we examined the income from our favorite investor (a 70-year-old woman with $2 million of savings, of which 50% is in a rollover IRA). We saw a large before-tax income advantage from Income Allocation planning. Even if she invests a portion of that to meet her legacy objective, she still has a $20,000 advantage in spendable annual income.

The question is whether she gives back that advantage in federal and state income taxes in her home state of New York.

Reducing your Combined Federal/State Retirement Tax %

You may have heard that New York is a high-tax state, and that’s true. It ranks No. 5 on Kiplinger’s list of the 10 least tax-friendly states for middle-class families.

Importantly, most states exclude Social Security income from taxation, as well as a portion of IRA distributions and employer pension plans. Together with interest on state and local bonds that is not taxed, a retiree has a head start in reducing state income taxes.

But the question remains how much of that advantage is eaten up in New York state income taxes. The key for our Go2Income planning is that annuity payments are treated the same in both the New York and federal tax returns, meaning the tax benefits carry over. And with some of the adjustments at the state level mentioned above, the favorable tax treatment of annuity payments may be even more valuable.

Let me share with you the high-level elements of our 70-year-old investor’s federal and New York state tax filing.

A table shows a total gross income of $168,183 results in federal taxes of $20,191 and New York state taxes of $3,564.

Benefits and Cost from this Planning

For our investor the income taxed by New York would be around $67,500 — or about 40% of her total gross income. As a percentage of total income, the state income tax is a little more than 2%. Even after adding federal taxes, her Retirement Tax Rate is less than 15%. That leaves her a big advantage in spendable income. A traditional plan without annuity payments and with lower income actually pays more in total taxes — with a combined tax rate of over 18%.

So, our plan produces more cash flow from savings, much of it tax-favored, and gives our retiree the freedom to live where she prefers.

And the cost? The primary one is that annuity payments don’t continue at your passing even before the premium has been recovered.

You can elect a beneficiary protection feature that makes sure total annuity payments will equal the premium at a minimum. However, that choice will reduce the level of guaranteed annuity payments and some of the tax benefits. Or you can use the higher annuity payments to purchase some life insurance. And those planning choices aren’t the only options you will have in terms of beneficiary protection.

What if the lure of zero state income taxes is too great? Our retiree could move to Florida, save the $3,500 in New York taxes, adopt a Go2Income plan for her circumstances — and pay for the kids’ trips to visit her.

So be with the kids, live where you want and possibly leave less at your passing if it’s early in retirement. Bottom line: Don’t follow the crowd. Do your own research. And rely on resources at Kiplinger.

At Go2Income, we can provide you with a complimentary personalized plan that delivers both a high starting income and growing lifetime income, as well as long-term savings.

Read the Full article: https://www.kiplinger.com/retirement/604701/dont-move-to-another-state-just-to-reduce-your-taxes

Receive Updates



Show Sponsors

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersDon’t Move to Another State Just to Reduce Your Taxes
read more

Annuity Payments Don’t Make Your Retirement: They Make It Better

No comments

Why do annuity payments belong in a plan for retirement income?

There is a very simple answer: Retirees who have annuity payments feel more confident about their long-term finances in retirement.

It seems obvious to someone like me, who is an actuary by training and spent most of my later career in the retirement business. That confidence comes because an annuity payment is similar to Social Security or a pension in one important respect: They all provide a lifetime of guaranteed income.

Since annuity payments are guaranteed under contracts issued typically by highly rated insurance companies, in my view retirees or near-retirees with a reasonable life expectancy should at least consider them as an important source of retirement income. However, according to one survey, a relatively low percentage of retirees — fewer than 15% — make annuity payments part of their retirement income plans.

So, let’s discuss the objections and questions that consumers often have about annuity payments, the contracts that guarantee those payments, and the reasons annuity payments belong in a plan.

Where the confusion comes in with annuities

Today, the annuity landscape is quite competitive and often confusing to average investors. There are many types of annuities. They can be grouped in various ways:

  • Accumulation or income.
  • Fixed, variable or indexed.
  • With or without downside protection.
  • Current or future annuitized income.

I take some responsibility for changing the annuity landscape, having invented the first annuity that could be categorized as accumulation/variable/downside protection/future annuitized income.

Unfortunately, contracts providing guaranteed annuity payments often get lumped together with other annuities, and that’s where the confusion creeps in. It’s just like with insurance: Car insurance is not the same as life insurance, health insurance or dental insurance. So, you should look at each annuity based on its stated purpose and not whether it shares a name with another product. One type of annuity might be just right for you, while others might not be a good fit.

The rest of this article is about annuity contracts whose sole purpose is to provide lifetime annuity payments — starting now or at a date in the future you select. Let’s start with a few questions I’ve gotten from readers like you.

Q: Do annuity payments increase with inflation?

A: In some contracts, annuity payments increase over time, but most do not. Those contracts that do provide payments that grow with inflation tend to have a starting annuity payment that is 20% to 30% lower than a contract with fixed, level payments. Inflation protection is not cheap.

Of course, the question about purchasing power and inflation is timely with what’s going on in the U.S. and elsewhere. The Labor Department announced in early February that inflation hit a 40-year high, with consumer prices jumping 7.5% compared with last year. If you relied on annuity payments for all your income, the value lost to inflation would be a major problem. But your retirement income plan shouldn’t look like that.

Read the full article: https://www.kiplinger.com/retirement/annuities/604254/annuity-payments-dont-make-your-retirement-they-make-it-better 

Receive Updates



Show Sponsors

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersAnnuity Payments Don’t Make Your Retirement: They Make It Better
read more

Wink, Inc. Names New President

No comments

by Sheryl J. Moore // Wink, Inc.

VICTORIA GROSSMAN TAKES THE HELM AT WINK, INC.

Des Moines, Iowa. December 2, 2021– Wink, Inc., the competitive intelligence firm specialized in providing life insurance and annuity product data to the industry, today announced Victoria L. Grossman has been named the President of Wink, Inc. effective immediately. Sheryl J. Moore, who has been Chief Executive Officer (CEO) and President of Wink since she founded the company 16 years ago, will continue in her role as Chairwoman and CEO, focusing on strategy and business development.

Grossman’s insurance career began as the first employee hired at Wink, gaining an intimate knowledge of products, sales, distribution, and markets as Wink’s first Marketing & Database Administrator. She has 14 years with the company, most recently serving as the Vice President of Operations; responsible for all company administration and oversight of the staff administering the company’s competitive intelligence tools.

“Victoria had become an irreplaceable leader for us. Her experience, judgment, and values have strengthened the Wink team,” said Moore, Chairwoman and CEO of both Wink and Moore Market Intelligence. “Victoria left a comfortable job, took a risk with me, and has been my right-hand woman ever since. Ms. Grossman stepped-in, and began her responsibilities as President, when I lost my son more than eight years ago. Now, I am merely giving credit where it has been due all this time. Victoria has earned this position and I am confident that she will embrace this important role, continue her exceptional leadership, and our pursuit of Wink’s mission and values.”

Click here to read the full press release on WinkIntel.com! 

Receive Updates



Show Sponsors

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersWink, Inc. Names New President
read more

What’s Your Retirement Number? Don’t Just Go by the 4% Rule

No comments

To help make sure your retirement income covers your needs and lasts for a lifetime, you need a custom plan. The 4% rule of thumb is a handy starting point, but it’s too general. Get specific to find your very own retirement number.

 

Numbers rule our retirement decisions, and we usually have questions about them. At what age will we stop working full time? How long of a retirement should we plan for? What do today’s low interest rates mean to our future income? Can we count on a reasonable dividend yield from our stock portfolio? What percentage of our income should be guaranteed for life, through Social Security, pension income and annuity payments?

Dollars or Percentages

We also look at retirement income as both dollar amounts and percentages. Should we try to replace 100% of our former income during retirement? Or should we set a fixed budget and find a way to meet that amount? You can determine which approach appeals to you by thinking about your last mortgage refinance. Did you congratulate yourself for shaving a percentage point or two off the mortgage rate, or plan for ways to spend the extra $300 you saved every month?

Common Retirement Measure: 4% Rule of Thumb for Starting Income Percentage

The 4% rule of thumb is another percentage, and it looms over the majority of retirement decisions. This is the rule that says people with a reasonable amount of savings when they retire should be able to make that pot of money last for 30 years even as they remove 4% of the total each year for living expenses. Studies have shown that three-quarters of all financial advisers rely on the 4% rule when offering guidance to their clients.

There’s just one problem. Baby Boomers retired last year at the rate of about 8,800 a day, or 3.2 million a year. And one size does not fit 3.2 million people. In fact, it is reasonable to think that every one of those retirees will seek a number that is right for them as they customize their retirement income plan to their specific needs. Further, the number is dependent on market conditions. When Wade Pfau, a financial academic, was asked whether the 4% rule of thumb still applies, he suggested that while it worked historically, it never dealt with the current low interest rates and high stock market valuations at the same time.

Your Starting Income Percentage is Unique to You

No ordinary rule based on averages can replace the factors you need to consider when figuring out how much income your savings can generate. Those factors include:

  • Your age, gender and marital status, all of which impact the life expectancy of your plan.
  • Market returns, interest and dividend rates, and inflation expectations.
  • Your legacy objectives for your kids and grandkids.
  • The amount of retirement savings you have accumulated.
  • Where your savings are invested: rollover IRA versus personal (after-tax) savings or even equity in your home.
  • Your attitude toward taxes, both current and proposed.

To illustrate, the chart below shows the impact of just three variables — age, gender and marital status — on what a viable starting income percentage could be for you using the Income Allocation planning method and typical savings makeup and legacy objectives.

Read the full article: https://www.kiplinger.com/retirement/retirement-planning/603854/whats-your-retirement-number-dont-just-go-by-the-4-rule

Receive Updates



Show Sponsors

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersWhat’s Your Retirement Number? Don’t Just Go by the 4% Rule
read more

Episode 113: Income Allocation Planning with Jerry Golden

No comments
How do you create more income with less market risk and lower fees and income taxes than traditional retirement income plans for your client? Jerry Golden, President & CEO at Golden Retirement joins us today to talk about Go2Income and the service that his tools provide for advisors that do just that.
Also, do you want to get regular updates on news from Jerry and other guests of our show? Go to https://thatannuityshow.com and subscribe to our newsletter. We hope you enjoy the show.
Special thanks to Bruno Caron for joining us as a co-host!
Links mentioned in this episode:
Find Bruno’s book here:

Thank you to our show sponsor, The Index Standard!

Fixed Index Annuities and RILAs are getting more complex and technical just when fiduciary rules are getting stricter. How do you choose the right index and allocate to them? The Index Standard is your answer. They are an independent provider ratings and forecasts on all indices and ETFs used in the US insurance space. Their process is systematic and unbiased, identifying robust and well-designed indices. We all know finance is complex and The Index Standard has a clear ratings system and uses approachable language to demystify this complexity. Visit theindexstandard.com for more information.

 Watch

 Listen

Receive Updates



Show Sponsors

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nicholas BreniaEpisode 113: Income Allocation Planning with Jerry Golden
read more