I recently received an email that contained some personal finance advice from two individuals I’ve always held in high regard – Scott Burns and Laurence Kotlikoff. Burns is a syndicated personal finance columnist, chief investment strategist for AssetBuilder, and originator of the couch potato lazy portfolio. Kotlikoff is a professor of economics at Boston University and the two teamed up to write The Coming Generational Storm, a book that doesn’t paint a rosy picture about retirement in the future America. They’re teaming up again to write a new book, Spend ‘Til the End — The Revolutionary Guide to Raising Your Living Standard Today and When You Retire, and offered up these two tips for retirees:
1. A tip for retirees: Buy TIPs.
For households who are retired or close to it and relying on the stock market to finance their retirements, moving their funds to inflation-protected long-term Treasury bonds (TIPs), makes good sense. So does using their regular financial assets to pay off their mortgages. There is no guarantee the stock market will rebound any time soon. And it could get worse before it gets better.
2. Another tip for retirees: See if Uncle Sam will give you a better deal on Social Security.
Retired or soon-to-be retired households should also ensure they are getting the best possible deal from Social Security. This includes considering repaying the Social Security benefits received in the past and reapplying for higher benefits. It also includes deciding when to take Social Security, integrating that decision with the timing of retirement account withdrawals, and deciding which account to tap first. Most important of all is determining how much one can safely spend. Spend ‘Til the End focuses on making sure households have enough funds to maintain their living standard all the way to the end — to their maximum ages of life. It also has a strong message for retirees who invest aggressively, namely spend defensively.