BlackRock explores methods to optimise retirement income, focusing on combining lifetime income options with strategic asset allocation and delaying Social Security claims for greater financial stability.

BlackRock's recent analysis delves into effective strategies to optimise retirement income, addressing the challenges retirees face in ensuring their savings provide sustainable support over an extended lifespan. Many Americans are living longer, yet the nation’s average retirement age remains stagnant, intensifying the need for smarter income approaches during retirement. Traditional advice often emphasises accumulating wealth during working years, but equal focus must be directed towards carefully managing the decumulation phase—when those savings are converted into sustainable income. This process primarily aims not only to ensure consumption needs are met seamlessly across time but also to safeguard against prematurely exhausting funds. Research indicates that integrating guaranteed lifetime income options with a progressively adjusted, risk-aware asset allocation can significantly enhance annual spending capacity by 29% while reducing downside risk by 33%. Beyond this, delaying both retirement and claiming Social Security benefits from age 65 to 67 further bolsters annual spending by an additional 16%, accompanied by a 15% drop in downside risk. These strategies, collectively, extend income security well past the average lifespan, offering retirees greater financial stability into their 90s and beyond. BlackRock underscores a holistic approach, encouraging individuals to view various sources of retirement income—such as Social Security benefits, savings, home equity, and other assets—through the lens of a unified portfolio rather than separate silos. Incorporating these elements allows for adaptable, optimised retirement plans tailored to dynamic personal circumstances. Acknowledging that not all individuals have equal access to financial planning resources or tools, BlackRock stresses the importance of policymakers cooperating with financial institutions and asset managers. Collaboration can provide broader, more equitable support, empowering savers, especially those without access to traditional advice, during both accumulation and decumulation stages. Education and innovative technological tools could play pivotal roles in equipping people with the guidance they require to navigate increasingly complex financial landscapes. Additionally, BlackRock emphasises that stakeholders across retirement ecosystems—including plan sponsors, asset managers, insurers, and policymakers—have a shared responsibility in rethinking modern solutions. Involving all these parties ensures the development of strategies aimed at addressing the diverse and evolving needs of today’s retirees. These findings from BlackRock, in partnership with the Bipartisan Policy Center, underscore how collaborative, forward-thinking financial strategies can reshape approaches to retirement, offering better income predictability and reduced financial stress for savers worldwide.