Closing Out 2017

As the end of 2017 approaches and the holidays demand more attention, let me suggest a few topics to mull over a cup of hot cider. (See what I did there?)

The current status of a tax bill with major potential impacts on personal finance is the reason I don’t spend a lot of time contemplating future taxes like Required Minimum Distributions at age 70½. Tax laws are just too unpredictable beyond the next few years.

My view of tax management is tactical and opportunistic. Republican Tax Bill Overhauls Rules Many Were Counting On from the New York Times[1] describes the impact of the new tax bill on people who “had a plan.” I don’t try to plan my taxes 15 years from now when I’m not sure what the law will be in 15 days, or whether future Congresses will change it back in 15 months.

To misquote an old, Yiddish proverb, “Man plans and Congress Laughs.”

Speaking of opportunities, if you’re early in retirement and will pay little or no federal tax for 2017, ask your tax planner about a Roth Conversion to pay little or no tax on some of your IRA savings. You have to make the conversion by the end of the year but if you later learn that you converted too much you can put back all or some of it with a “recharacterization.”[2]

Retirement strategies span a spectrum from “safety-first” to “probabilist”, the former recommending a safe floor of income from annuities, Social Security benefits and Treasuries before investing for upside potential, while the latter proposes that equity investment can solve both problems.

Another way to refer to these strategies is “risk pooling versus risk premium”, or annuities versus stocks. In Risk Pooling Versus Risk Premium[3] Wade Pfau concludes that “Those favoring spending and true liquidity will find that it is much more difficult than commonly assumed for an investments-only strategy to outperform a strategy with partial annuitization.” Pfau addresses some key issues like “true liquidity” and the diminishing advantage of stocks for leaving a legacy at advanced ages.

I’ve recently chatted with a start-up called Blueprint Income[4] that offers what is effectively a “mutual fund” of deferred income annuities. They will partner with top insurers to allow workers to “Contribute the amount you’re comfortable with whenever you see fit.”

I find the idea quite interesting as it overcomes the issue of writing a single, large check and also provides diversification among the safest insurers. Take a look at their website linked below.

I have said before that as both a retirement researcher and computer scientist, I don’t yet trust “robo-advisers.” I am working with one that I believe is trying to do it right, though, A Forbes column, NewRetirement: A New Approach to Retirement Planning, interviews its founder, Stephen Chen. The website is operational and you can try it at no cost.

Thanks for reading Retirement Cafe´ in 2017. I have a long list of posts to write beginning right after the holidays, but in the meanwhile, I’m going to have that cup of mulled cider and listen to the Pentatonix.

Wishing you and yours a great 2018.

Cheers. . .


[1] Republican Tax Bill Overhauls Rules Many Were Counting On – The New York Times

[2] 6 Things to Know if You Are Thinking about a 2016 Conversion | Ed Slott and Company, LLC

[3] Risk Pooling Versus Risk Premium, Wade Pfau.

[4] Blueprint Income | Introducing the Personal Pension

[5] NewRetirement: A New Approach to Retirement Planning, Forbes.


Originally posted at

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