Tax Deferral Key to Generating Income, Saving More

Tax deferral is vital for accumulating more savings and generating more retirement income, according to a new white paper released by Jefferson National, and the key is using a low-cost, no-load tax-deferred investment platform such as a no-load, flat-insurance fee variable annuity after maxing out contributions to other vehicles such as IRAs and 401(k)s.

“Many investors assume it takes several decades of tax-deferred growth to produce after-tax returns that are higher than those produced by a taxable account,” says Ira Weiss, of the University of Chicago, who co-authored the paper with Jefferson National’s Matthew Grove. “However, depending on the mix of asset classes and trading strategy used, it can take anywhere from 13 years to as little as one year for a tax-deferred portfolio to outperform a taxable portfolio. Our research concludes that advisors should consider moving taxable accounts earmarked for long-term accumulation into a low-cost, no-load tax-deferred investment platform to enhance their clients’ after-tax outcome.”