written by William Meyer, CEO, Retiree Inc.; William
Reichenstein, Co-founder, Retiree Inc., and Kirstin A. Cook, professor at Texas Tech
University, suggests that most retirement tools are based on the flawed
conventional wisdom that retirees should withdraw funds from one account at a
time starting with tax-deferred accounts and moving on to tax-exempt accounts.
The authors argue this method is not the most tax efficient.
our research, we found there are better strategies for creating retirement
income than the ones the industry is currently using,” says Meyer.
“These strategies provide greater tax efficiency, creating six or more
years of income. That’s a game changer for a retiree.”
The research published in the CFA Institute’s Financial Analyst Journal demonstrates that the most tax-efficient strategies take into
account progressive tax rates, consider drawing from multiple accounts
concurrently and using Roth conversions—all while taking advantage of years
when the investor has lower marginal tax rates. The research shows that using
these unconventional strategies can add more than six years of portfolio
longevity compared with a conventional strategy.
including one by Corporate Insight found concerning differences in retirement income calculators even when inputting the same
Retiree Inc., produces retirement income planning software for
both financial professionals and consumers. The authors’ complete research can
be accessed online here.