Stanford Researcher: Delay Social Security Until 70 If You Want A 30-Year Retirement


Dr. John Shoven, director of the Stanford Institute for Economic Policy Research, gave a talk this month called “Financing a 30-year retirement.”

Dr. Shoven’s thesis was that today’s workers can finance a 30-year retirement – but only by putting off Social Security until age 70.

The San Diego Source explains:

Too many retirees can’t afford to live 20 more years on their savings or pensions if they quit early. The reality is that few can fund a 30-year retirement on a 40-year career.


His plan to maximize retirement benefits is to delay drawing Social Security at least to age 70. That plan depends on some supplemental pension resources, such as an IRA or a 401(k) plan that can provide an income flow between retirement and age 70 — even better if you work until 70.

There is an advantage for the employer to keep an experienced worker on the job beyond traditional retirement age. When the employee has been subject to payroll taxes for 40 years, he and the employer no longer pay the taxes. The employee is paid up after 40 years and will not receive any additional retirement benefits, Shoven said.

Why delay taking the Social Security benefit you have been funding for 40 years? Shoven’s charts show how much more income flow can be collected assuming, you live another 10 to 20 years. It’s a potential increase of 25 to 30 percent in monthly pension, maybe adding from $100,000 to $200,000 to benefits. Not bad if you meet or beat the mortality rate.

Another hidden subsidy for retirement is to have the mortgage on your home paid off by quitting time. Those pension checks will stretch further if a monthly payment is avoided.

In situations where both spouses collect Social Security, it is best for the higher earner to wait, so the surviving spouse gets a larger survivor’s benefit. Demographics show that a surviving wife lives 11 more years.


Photo Credit: Simon Cunningham via Flickr Creative Commons License

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