The Journal of Financial Planning just published our research in the April edition.
I’m very proud of this work and want to give you some of my thoughts. I see this research as a large “breakthrough” for retirees and improving financial advice. Overall, the premise of the research is so simple it makes sense! If you get more Social Security, your money will last longer.
1. Deciding when to take Social Security is the largest decision you will make in your life. We showed that this decision adds 2 to 10 years to the length of how long your savings will last depending on your affluence.
2. The amont you have saved doesn’t matter. You should consider a strategy that maximes because it will have a huge impact on your financial situation. Note, the greatest impact is for families that haven’t saved as much. For example, someone who has $200,000 of savings can add +10 years of longevity to their money by maximizing Social Security.
3. This is the first study that addresses Social Security and taxation in the retirement income literature about the “4% rule.” It is crazy to me that there are all these “rules of thumb” that exclude the biggest elements that will impact your retirement strategy…taxes and Social Security.
I’ll post more about the research over time. But, here is the bottom line: 1) if you haven’t started Social Security, definitely spend time learning about creating a smart strategy to get more money, and 2) if you have started Social Security, make sure you withdrawal other saving you have to minimize the taxation of Social Security. We’ve developed tools to help you with this. Also, we can give you some educational pieces or guide you.
People, by carefully integrating Social Security into your financial plan every year can add thousands of dollars back into your pocket.
So, I’m proud to share our research with you and the financial services industry. We worked on this for a long time. I’m hopeful other institutions can use these ideas to help more Americans live better in retirement.