Key Retirement Strategies From a Stanford Study

As defined benefit plans are being replaced by defined contribution plans people planning for retirement are dealing with questions of the best way to save for retirement and if they can save enough. A Stanford longevity scholar analyzed dozens of retirement strategies and found the best one to be Social Security.

According to the study, it meets more retirement goals than any other income generator. Therefore, the study says it makes sense for you to maximize the value of Social Security by delaying the start of benefits and think about possibly consulting a financial adviser that specializes in Social Security.

The study found that for many middle-income retirees, Social Security will represent one-half to two-thirds of total retirement income if workers start taking Social Security when they’re 65, but it they wait until 70, three-fourths to more than 85% of their retirement income will be Social Security. According to the study, the best way to make this possible is to work just enough to pay for living expenses until you turn 70, while at the same time significantly reducing living expenses.

If you aren’t willing or can’t delay retirement, the study says you should use a portion of savings to make delaying Social Security possible. Keep in mind, using savings can substantially reduce the amount of remaining assets and liquidity in retirement.

In addition, an older worker might want to use a portion of their retirement savings to build what the study calls a “retirement transition bucket.” The study says the bucket could be invested in a liquid fund with minimal volatility in principal, such as a money market fund, which could protect a substantial amount of income from investment risk.

The study warns the research doesn’t put into account the high cost of medical expenses or long-term care and suggests you convert unexpected medical costs into predictable monthly premiums through Medicare and Medicare supplement policies.