LEAWOOD, Kan., Aug. 30, 2016 /PRNewswire/ -- While it's no
secret that all retirement calculators are not created equal and
it's been well-reported that the same inputs receive varying
longevity results across retirement tools, new research shows that
many of these calculators cheat investors out of six or more years
of retirement income by using inefficient drawdown strategies.
This discovery comes from the research article, "Tax-Efficient
Withdrawal Strategies," published in The Financial Analysts
Journal and written by William
Meyer, CEO, Retiree Inc.; William
Reichenstein, Co-founder, Retiree Inc. and Professor,
Baylor University; and Kirsten Cook, Assistant Professor, Texas Tech
University.
Within the article, the authors debunk the conventional wisdom
around tax-efficient retirement withdrawals, which suggests that an
investor should withdraw funds from one account at a time moving to
the next one after the previous is exhausted, starting with
tax-deferred accounts and moving to tax-exempt accounts. The paper
clearly demonstrates that this conventional wisdom, which many
retirement drawdown tools are built on, is not the most
tax-efficient.
"Through our research, we found there are better strategies for
creating retirement income than the ones the industry is currently
using," said Meyer. "These strategies provide greater tax
efficiency, creating six or more years of income. That's a game
changer for a retiree."
The research demonstrates that the most tax-efficient strategies
take into account progressive tax rates, consider drawing from
multiple accounts concurrently and use 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.
Access the entire research article here:
http://www.cfapubs.org/doi/abs/10.2469/faj.v71.n2.2
About Retiree Income
Retiree Income was founded on the
belief that there is a better way to serve retirees or people
getting ready to retire—one that is smarter and more personalized.
The company produces retirement income planning software for both
financial professionals and consumers.
About William
Meyer
Throughout his career, William Meyer has looked for new ways to deliver
higher quality advice to people in retirement. He has a unique
combination of experiences in leading the design and launch of
innovative client centric services and products, as well as
leveraging technology in service offerings.
Early in Bill's career, he learned financial planning techniques
for the affluent, and has strived to apply those insights to all
households regardless of wealth. He has a track record of
successfully developing products and services in executive
leadership roles at H&R Block, Advisor Software and
Charles Schwab.
About William Reichenstein,
PhD, CFA
Dr. William
Reichenstein, CFA, holds the Pat and Thomas R. Powers Chair
in Investment Management at Baylor
University. His recent work concentrates on the interaction
between investments and taxes. He is the author of In the
Presence of Taxes: Applications of After-Tax Asset Valuations
(FPA Press, 2008), and coauthored with William
Jennings Integrating Investments & the Tax
Code (John Wiley & Sons (2003).
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SOURCE Retiree Income