BlackRock and the Bipartisan Policy Center Chart a Path to Optimized Retirement Spending in New Paper
June 21 2023 - 8:00AM
Business Wire
Research finds adding guaranteed lifetime
income and adjusting asset allocation could result in nearly 30%
more annual spending power in retirement
Americans saving for retirement could benefit from a holistic
approach to planning that considers guaranteed income, optimal
asset allocation, and Social Security claiming, according to new
research released by BlackRock, the world’s largest asset
manager, and the Bipartisan Policy Center, a leading
Washington-based think tank. “Paving the Way to Optimized
Retirement Income” examines the challenges Americans face when
planning to spend their retirement savings, and how the public and
private sectors can work together to find solutions to help
savers.
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As the report highlights, Americans with access to a retirement
plan are frequently encouraged to save, but guidance on how much to
spend once they reach retirement is lacking. “Retirement spending
is one of the hardest problems retirees face, so the industry needs
to give people affordable, innovative solutions and tools to help
them navigate this challenge. We did this research because we think
more people could use these levers if they knew about the benefits
they can provide,” said Matt Soifer, Head of Distribution for
BlackRock’s Retirement Business.
“The role of policymakers should be to make it as easy as
possible for Americans to turn their hard-earned savings into
income in retirement. Congress has made significant strides in
recent years in the SECURE bills, but there’s more work to be
done,” said BPC Vice President and Chief Economist Jason
Fichtner.
The research outlines key findings and examples based on a
typical American worker’s financial situation when they are ready
to retire:
- Savers should consider a three-step framework to help chart
their path to retirement spending: (1) determine retirement
objectives, (2) consider key risk factors and (3) formulate a
holistic strategy.
- Pulling a few levers within this framework, such as increasing
Social Security benefits by claiming later and adding guaranteed
income, can significantly boost spending power.
- For an average worker aged 65, adding guaranteed lifetime
income and adjusting asset allocation resulted in nearly 30% more
annual spending from savings alone (excluding Social Security) and
reduced downside risk by 33% (compared to a standard 60/40
portfolio).
- Delaying the claiming of Social Security benefits can generate
even more annual spending and further reduce downside risk.
Taken together, these strategies have the potential to extend
retirement spending power well beyond the average person’s
lifespan, providing a higher “spending floor” into a retiree’s 90s
and beyond. The paper notes policymakers and the private sector
each have an important role to play to help Americans understand
what they can do to optimize their spending in retirement. While
SECURE 2.0 demonstrated important progress to advance retirement
security, the research proposes additional policy measures that
could have a meaningful impact to help savers. Increasing
participation through auto-enrollment and auto-escalation,
minimizing early withdrawals, expanding the use of guaranteed
lifetime income products, and understanding when to take Social
Security benefits are all steps that can be taken to advance a more
equitable retirement system.
About BlackRock: BlackRock’s purpose is to help more and
more people experience financial well-being. As a fiduciary to
investors and a leading provider of financial technology, we help
millions of people build savings that serve them throughout their
lives by making investing easier and more affordable. For
additional information on BlackRock, please visit
www.blackrock.com/corporate
About the Bipartisan Policy Center: The Bipartisan Policy
Center is a mission-focused organization helping policymakers work
across party lines to craft bipartisan solutions. By connecting
Republicans and Democrats, delivering data and context, negotiating
public policy, and creating space for bipartisan collaboration, BPC
helps turn legislators’ best ideas into durable laws that improve
lives. Since 2007, the Bipartisan Policy Center has helped shepherd
countless bills across the finish line.
This material is provided for educational purposes only and
should not be construed as research. The information presented is
not a complete analysis of the global retirement landscape. The
opinions expressed herein are subject to change at any time due to
changes in the market, the economic or regulatory environment, or
for other reasons.
The material does not constitute investment, legal, tax, or
other advice and is not to be relied on in making an investment or
other decision.
Investing involves risk, including possible loss of
principal.
Asset allocation models and diversification do not promise any
level of performance or guarantee against loss of principal.
The opinions expressed in third-party articles or content do not
necessarily reflect the views of BlackRock or the Bipartisan Policy
Center. BlackRock and the Bipartisan Policy Center make no
representation as to the completeness or accuracy of any
third-party statement.
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version on businesswire.com: https://www.businesswire.com/news/home/20230621853969/en/
BlackRock Thomasin Bentley Thomasin.bentley@blackrock.com (646)
231-1769
Bipartisan Policy Center Erin Meade emeade@bipartisanpolicy.org
(412) 389-4790
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