The Best Way To Guarantee More Money

The one resource Americans have little faith in—Social Security—could be the key to securing lifetime income, research shows.

- Elizabeth O'Brien

YOU DON’T NEED fancy financial products to stretch your retirement savings. In fact, most Americans have access to the best retirement income generator around: Social Security, according to a study by researchers at the Stanford Center on Longevity.

In collaboration with the Society of Actuaries, these researchers recently analyzed 292 retirement income strategies, looking for optimal ways middle income workers—Americans with $100,000 to $1 million in savings who don’t have significant help from financial advisers—can fund living expenses in retirement.

Their conclusion: Social Security, if tapped strategically in concert with other sources of income—such as your 401(k)s, individual retirement accounts, and home equity—will meet most of your planning goals.

This may come as a surprise, since a recent Gallup poll showed that nearly two-thirds of Americans assume Social Security will be either “a minor source” of their retirement income or “not a source at all.”

Yet the researchers point out that “for most middle-income retirees, Social Security is the foundation of retirement income, providing anywhere from half to more than three-fourths of total retirement income.”

MAXIMIZE YOUR SAFETY NET

The study’s authors created a retirement income strategy around Social Security that they call “Spend Safely in Retirement.” Their approach tries to wring out the most from your existing savings, while maximizing Social Security’s guaranteed income, writes Steve Vernon, research scholar at the Stanford Center on Longevity and lead author of the study.

This strategy also protects against inflation and the risk of outliving savings and is designed to minimize taxes and complexity.

STEP 1: DELAY CLAIMING BENEFITS