Stanford University

To support research and analysis of the economics of series versus parallel retirement income strategies

  • Amount $315,860
  • City Stanford, CA
  • Investigator John Shoven
  • Year 2011
  • Program Research
  • Sub-program Working Longer

As the U.S. retirement landscape has shifted from one dominated by defined benefit plans (DB) to one dominated by defined contribution plans (DC), older Americans have had to assume more responsibility, as well as more risk, in ensuring their long-term financial security. To that end, they must make complicated income strategy decisions: how long to work; when to retire; whether to work post-retirement; and how strategically to utilize their DC assets and Social Security benefits. This grant supports a project by Stanford economist John Shoven, and Occidental College professor Sita Slavov to analyze and evaluate the potential financial benefits of a specific income strategy that they refer to as the "series" strategy. Utilizing this strategy, older Americans would first deplete their DC assets before drawing on their Social Security benefits, hence using their retirement resources serially. Shoven and Slavov plan to clarify how-under specific conditions that individuals and couples face, such as both working or one earning more than the other-the "series strategy" could lead to more attractive returns relative to the more typically-used "parallel" strategy, where older Americans simultaneously use their defined pension accumulations to supplement Social Security, hence using them in parallel to one another. Preliminary analyses suggest there are substantial financial benefits to the "series" strategy for older Americans, in large part due to the fact that Social Security benefits are indexed to inflation and increase as initial payments are delayed. Addition grant funds will support the publication of a publicly available brochure laying out Shoven and Slavov's conclusions and a conference directed at informing federal policymakers, researchers, financial advisors, and other relevant stakeholders about the research.

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