Managing Taxes in Retirement: Income Thresholds versus Incremental Average Tax Rates
August 2, 2022 | Income DiscoveryPublished by AdvisorPerspectives on August 1, 2022 [View]
Income Discovery was featured in an AdvisorPerspectives article, written by retirement income expert Wade Pfau.
Wade created a case study to directly compare two approaches for tax-efficient retirement distribution strategies: 1) conventional wisdom approach of using adjusted gross income (AGI) thresholds vs. 2) Income Discovery’s approach using an incremental average tax rate.
Wade’s conclusion is that both methods can provide similar results, however Income Discovery’s approach using an incremental average tax rate “provides a straightforward means to accomplish the same result more directly.” He agrees that it is easier to compute and more flexible. He also confirms our view that Income Discovery’s approach is easier for advisors and clients to understand.
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