How Smoking Salmon Is like Managing Taxes for Retirement

March 18, 2015

This post answers the question, "How is smoking salmon the same as managing taxes for retirement?"

I visited Alaska last summer, and my favorite day was a boating trip through the Kenai Peninsula (on the southern coast). I saw bald eagles, a variety of whales (including the Pacific Life whale… just kidding), and several glaciers. The glaciers hinted at the extreme weather conditions Alaskans face every winter. I realized that Alaskan Native Americans had mastered fire to deal with the cold, but wondered: "How did they have enough food to survive winter without modern amenities like a grocery store?" The answer is closer to modern-day retirement planning than one would think.

In the "old" days, Alaskans relied mostly on hunting, fishing, and gathering to survive. To prepare for harsh winters, they smoked or dried their food, like salmon, for winter storage and use. I can personally vouch that Alaskan smoked salmon tastes delicious. But, I digress. The question remains: "How is smoking salmon the same as managing taxes for retirement?"

Well, both involve:

  • Deferred gratification
  • Leveraging the natural order

Deferred Gratification

Native Alaskans deferred gratification when planning for winter. They cold-smoked salmon caught during the summer and created a "jerky-type" meal that could be enjoyed during the winter; they "deferred gratification."

Some financial products, such as nonqualified deferred annuities, are designed as vehicles to supplement retirement income (and enhance "deferred gratification"). A nonqualified deferred annuity can help take advantage of the power of compounding by allowing money to accumulate without paying taxes on earnings until withdrawn. It can also help higher income clients try to plan around exposure to:

  • Higher income-tax brackets (and associated higher long-term capital gains rate)
  • Net investment income tax
  • Alternative minimum tax

Leveraging the Natural Order

Leveraging the natural order can be defined as taking advantage of your natural surroundings to obtain a better outcome for yourself. Native Alaskans learned to take advantage of their natural surroundings by catching and curing foods such as salmon so that they could survive winter without their food spoiling.  

When drawing income in retirement, leveraging tax rules can enhance after-tax income and reduce healthcare costs. How? What's counted as "taxable income" in retirement could impact all the previously mentioned exposures and the:

  • Percentage of Social Security benefits subject to income taxation
  • Amount of Medicare Part B and Part D premiums

Draw-down strategies such as withdrawing from a Roth IRA first (if available), or partially annuitizing a nonqualified deferred annuity (if available) could create a cascade of tax and healthcare cost savings. With this in mind, always have the client confirm with a tax advisor the best strategy for drawing down retirement assets, because careful tax planning could magnify after-tax retirement income.  


In summary, people planning for retirement today are not smoking salmon for retirement, but they are saving money to meet retirement expenses that could include smoked salmon on a bed of fettuccini alfredo (with a glass of Chardonnay).

For more information about managing taxes in retirement and the power of tax-deferred growth, contact the Retirement Strategies Group at (800) 722-2333, ext. 3939, or send e-mail to


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