This discovery comes from the research article, "Tax-Efficient Withdrawal Strategies," published in
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.
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,
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/new-research-shows-most-retirement-calculators-are-not-tax-efficient-300320206.html
SOURCE Retiree Income