How can I keep from outliving my money? Find out how Social Security can help secure your retirement—read Modern Retirement

Questions you can ask your UBS Financial Advisor:

  • At what age should I start drawing Social Security to maximize my income stream in retirement?
  • Can Social Security be factored into my long-term investment strategy? How hard can it work toward securing my retirement?
  • What if there’s a bear market when I’m about to retire—or while I’m retired? Can Social Security help prevent me from having to sell my stocks?

While Social Security is often seen as a supplement to 401(K)’s, IRA’s and other investments, you may not realize just how valuable a Social Security “nest egg” is—and the important role it can play in helping you achieve a more secure retirement. CIO Americas, Wealth Management (CIO-A WM) outlines some effective strategies in the first edition of the new series: Modern Retirement Monthly (PDF, 362 KB).

The hidden million-dollar asset

According to CIO-A WM, those who retire at full retirement age and have qualified for the largest primary insurance amount (PIA) could receive potentially $32,000 per year, for life. What would a retiree roughly have to save in the private sector to create the same guaranteed income stream? For a husband and wife, for example, who both receive the largest PIA benefit, their Social Security “asset” is roughly the equivalent of a $1.2 million asset, according to CIO-A WM.

Now or later?

However, trying to make the best decision about when to start claiming Social Security is much like trying to perfectly time the birth of a child. There are many variables. The general rule of thumb is that workers who file before their full retirement age will receive lower monthly benefits, but will receive the benefits for a longer period. Workers who delay filing will receive a larger benefit, but for a shorter period. So, how do you decide when is the right time for you to start?

Social Security as a bond portfolio

CIO-A WM recommends retirees think of Social Security almost as a bond position that works together with other investment assets. By providing guaranteed income, Social Security has the potential to reduce risk by allowing a retiree not to have to touch risk assets like stocks during a bear market. It recommends a dynamic strategy that would delay filing until the first of two events: 1) reaching age 70 or 2) experiencing a bear market, at which point the retiree can begin taking Social Security to prevent dipping into an investment portfolio.

Of course, every individual is different, and there are other variables that matter, like tax rates, other sources of income, rate of return on investments and inflation. Ultimately, CIO-A, WM recommends that you make any retirement decision based on a comprehensive financial plan and through conversations with your Financial Advisor.

For more on making the most of Social Security in retirement, read the full report (PDF, 362 KB)