Advisors might become obsolete if the “Spend Safely in Retirement Strategy” (SSIRS), originally developed by the Society of Actuaries and Stanford Center on Longevity in 2017, attracts older workers and retirees in droves. SOA and SCL recently released a paper on the viability of spending safely in retirement, which helps retirees help themselves.
The “baseline strategy” was developed to “pensionize” retirement income, such as IRAs and 401(k)s, to help older workers and retirees to determine the amount of lifetime income they will have in retirement. The groups now plan to implement the strategy.
The strategy is designed for older workers and retirees who have not accrued significant benefits in defined benefit pension plans, have accumulated meaningful balances in defined contribution retirement plans, IRAs, or other savings, and might not work with financial advisors.
The two key steps to the strategy are optimizing Social Security benefits with a “careful delay strategy,” and generating retirement income from savings using the IRS required minimum distribution rules along with a low-cost index, target date or balanced fund.
“We developed the strategy to enable older workers and retirees to implement it on their own, using funds that exist today in IRAs and 401(k) plans, and without needing to work with a financial advisor,” Steve Vernon, one of the study’s co-authors, a fellow of the Society of Actuaries and a research scholar with the Stanford Center on Longevity, said in a statement.