Money Magic: 5 Levers To Boost Your Safe Retirement Income By $50k+ a Year

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards and may receive a commission. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

In personal finance, I often think in terms of “levers” to push or pull. Here are five different levers to increase your portfolio safe withdrawal rate in retirement. Here are three levers used increase your final savings balance at retirement:

  • Asset allocation: How are you investing your money?
  • Savings rate: What percentage of your income do you save?
  • Time horizon: How long are you saving for?

Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life by Laurence Kotlikoff has another good example of pulling certain levers involving a couple that comes to him with their proposed retirement plan. By tweaking these five different levers, he is able to increase their allowable monthly spending (above housing) by over $6,000 a month for the rest of their lives (a net present value of over $1.5 million):

  • Delay taking Social Security. “First, they should wait to begin taking their Social Security benefits till age seventy, rather than immediately at sixty-two.”
  • Use your 401(k) to fund your retirement early years instead. “Next, they should start to withdraw from their 401(k) accounts now, rather than wait till seventy.”
  • Buy joint survivor single premium immediate annuities. “They also should take their 401(k) withdrawals in the form of joint survivor annuities.”
  • Downsize your house/condo. “Next, they should downsize their four-bedroom house by half.”
  • Move to a lower-tax state. “And finally, they should move to New Hampshire, which has no state income tax.”

The result:

This retirement makeover will make an amazing difference. In fact, it will more than double the Smith’s sustainable retirement spending! Under their original plan, the Smiths could afford to spend $5,337 per month in addition to covering their housing costs and taxes. Under the new plan, they can spend $11,819 per month in addition. That’s a ginormous increase and adds up to a $1,578,374 increase in lifetime spending measured in present value. In other words, the new plan amounts to handing the Smiths a bag filled with around $1.5 million in cash. This is money magic, pure and simple.

Now, I’m not sure I would use the term “magic”, but these are readily-available choices and the numbers come from the author’s MaxiFi retirement planning software. Living in a two-bedroom condo instead of a four-bedroom house is not the same experience, but at least you should explore it and weigh the costs and benefits. Using single premium immediate annuities to supplement Social Security is a way to guarantee income, and they are the simplest and most transparent form of annuities that are easy to comparison shop directly. I bet that significant percentage of retirees don’t even run a free, no-obligation quote.

I enjoying finding and thinking about the levers in my life. Even if not financially-optimal, it feels good to make a conscious choice and know that your actions matter. I know that I could have made more money by moving to a different state with better job opportunities, lower taxes, and/or lower cost of living. I know that I could have bought a bigger house, but also a much smaller house.

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.


  1. I have thought about moving to a low tax rate state, but find the property taxes take back a lot of the savings. I haven’t explored all of them, so if someone knows a state where this isn’t true, please comment.

    I’m going to take a look at this book. I’m always amazed at the ingenious ways people find money savings.

  2. “move to New Hampshire”

    Why New Hampshire ? Don’t know the context but why NH specifically? Are the couple in question currently in the Northeast ?

    I don’t think telling people generally just to move to a different state is great retirement planning advice. Most people will want to stay near family & friends and have roots in their community.

    • There was a section that I didn’t include describing the details of the original retirement plan, but I believe the couple lived in New York initially. So NH would be close-ish by, although yes your point is valid that moving away from your social base is not “magic”. Mostly, I just wanted to convey the general idea, which was the option to move to a lower cost area, whether it be due to total taxes or other living costs.

    • There is no denying some people need to consider this though. The number of people I see living in their cars in California just to stay in California is weird. If you don’t need to work in the area and can’t afford the housing, it’s time to let it go though it’s not optimal.

  3. Good advice, although only the first three are really related to retirement. If moving and downsizing at retirement time will create “a ginormous increase” then there isn’t really a word to describe the increase you could get if you downsize & move at 50 or 40 etc. Leave a house or city that you love & consider your home to save money? It’s something to consider but that kind of advice is similar to saying “stop doing what makes you happy and live life frugally”. While financially true, how good can retirement be if you enjoy life less or miss things you enjoyed because you “saved the most money”.

Speak Your Mind