Tax Strategy 2: Reduce Current Tax Bill with Monthly Income

Not everyone has the luxury of being able to reinvest. Many people need income from their investments to meet their living expenses. Nevertheless, they would still like to lower their current income taxes. For these people, a little known strategy can work financial miracles. The strategy is often referred to as a combo strategy or split annuity strategy.

Once you understand the strategy, you will wonder why no one ever told you about it before. As the names imply, this strategy uses two annuities – one CD-type annuity and one period certain immediate annuity. In the combo strategy, your principal is preserved by the CD-type annuity and your income is created by the immediate annuity. In most cases, you can create an income stream that is 75% to 80% free of current income tax.

To know if a combo strategy will work for you, answer the following questions:

• Do you pay income taxes?
• Are you taking interest income from non-qualified (e.g. non-IRA) investments?

If your answer to each is ‘yes’, a combo strategy may help you put more money in your pocket. To view a current example of a combo annuity strategy, go to the following link:

After you enter in your state, age, and investment amount, the page will calculate and display the highest paying annuities, your monthly income, and your tax savings. If you have questions about the combo strategy, don’t hesitate to call. The combo strategy can be a great way to create sound income, preserve your principal, and lower your taxes.