How to make sure your money last in retirement

To make sure your retirement nest egg goes the distance, you need growth as well as income. Rule number one: Don’t dump stocks. Inafter teaching math for 34 years at a private school in the Washington, D. He spent a few months you his successor as head of the math department and, in December, retired at the relatively young age of Bob’s wife, Margaret then 56had retired a few months earlier lsst her job in the mortgage industry. The couple were eager to kick back in their new home, in Ocean Pines, Md. Their timing couldn’t have been worse. The stock market entered a downward spiral just as the Longs were tapping into their retirement savings.

1. Downsize your house

If you are in good general health and take care of yourself, you may very well live much longer. And while that means more time with family, more time to see the world, and more time to finish your great American novel, it also means you’ll need enough retirement savings to last for decades. Read more : Here’s exactly how to figure out when you can retire. No matter when you plan to retire, the best thing you can do to build savings is to start today or yesterday, if you can manage it. But once you’re getting close to retiring, there are a few strategies you can use to stretch the savings you have:. Even a small amount of income can have a large influence on how long your retirement savings last. Read more : 3 financial decisions that will make it harder to retire. Barson said one of the greatest determinants of whether your investment portfolio will last until you reach will be how much you take out for spending. If you expect to live until , you want to take out as little as possible. She added : «Depending on the age you retire and the frequency, size, and type of investments you have, you may require a bigger or smaller nest egg. The earlier you save and invest, the more time your money has to grow and compound.

Live off your interest

The further out you are from retirement, the more risk your investments can take on, too. Retirees often make the mistake of getting too conservative, Barson said. Read more : 7 ways to make your post-retirement life easier if you want to quit your job in 10 years. As a retiree, it’s vital to get a handle on your basic living expenses versus your lifestyle expenses, which may include dining out, entertainment, and vacations. Barson recommends having your income pension, Social Security, and investment withdrawal deposited into a «house» checking account to cover your monthly living expenses.

Don’t dump stocks

Many people worry about running out of money in retirement. There are several ways, however, to boost the odds that your money will last as long as you need it. Among them:. Lowering your fixed expenses — shelter, food, transportation, insurance, utilities and minimum loan payments — can help you withdraw less from your savings, which in turn can help your money last longer. One powerful way to reduce expenses is to downsize to a smaller home if you can reduce or eliminate your mortgage payment and shrink other costs such as property taxes, utilities and insurance. Eliminating debt before you retire is often a good way to reduce expenses, but consult a fee-only financial planner before withdrawing retirement funds to pay off a mortgage. Such withdrawals can trigger a big tax bill and leave you without enough cash for the future. More importantly, though, bigger Social Security checks serve as a kind of longevity insurance. If those expenses exceed what you expect to get from Social Security and traditional pensions, consider buying additional guaranteed income by purchasing an immediate annuity. Unlike other types of annuities that can be complicated and expensive, an immediate annuity can provide a stream of income for life in exchange for a single lump-sum payment upfront.

1. Delay claiming Social Security

Every upcoming retiree wants to know how long their money will last in retirement. To come up with an answer, you need to address all of the seven items in this list. The rate of return you earn on savings and investments will have a large effect on how long your money lasts. Same with stocks. There have been decades where stocks provided outstanding returns and decades where the returns were about the same as what you would get if you had stuck with safe investments. There is no way to know exactly what rate of return you will earn on your money in retirement. Basing the success of your plan only on average returns is not a good idea. An average means half the time you would have earned something below average. Some year time periods look great; others do not. You must make sure your plan works even if you get an outcome that is below average. You can then run scenarios showing you different options so you know what to adjust in your plan such as spending if you retire into a time period that delivers below average returns. When you are taking money out of accounts, the sequence of returns, or order in which you experience returns, matters. For example, suppose the first 5 to 10 years of your retirement all your investments do well, and so you not only have the amount you need to withdraw, but in addition, your principal balance grows. In this situation, your chances of running out of money go down.

Take control of your savings

They have to find a way to cover the necessities. That can lead to higher taxes and Medicare Part B premiums, reducing the money you have available for yourself and your family. Not a bad combination, enabled entirely by your flexibility. Be aware that funds have different asset mixes and different timetables for adjusting them, called glide paths see Pick the Best Target-Date Fund for You. In addition, you may also be able to generate enough cash from the sale of your old place to improve your financial cushion as well, helping stretch your dollars further. The remainder would go into a third bucket, a mix of stock and bond funds. Basing the success of your plan only on average returns is not a good idea. Previous Next. By keeping your costs down by investing in index funds and considering managing your portfolio rebalancing on your own, you can help your money last that much longer. And they dipped back into the workforce.

1. Keep earning money, even if it isn’t at your primary job

An average means half the time you would have earned something below average. The IRS life-expectancy tables for a year-old man use an average life expectancy almost twice as long as the one actuaries at Social Security use. You can then run scenarios showing you different options so you know what to adjust in your plan such as spending if you retire ,oney a time period that delivers below average returns. To make sure your retirement nest egg goes the distance, you need growth as well as income. And your bucket strategy may compete with your tax strategy see How to Lessen the Tax Bite in Retirement. Low interest rates are dampening the income you can generate with a single-premium immediate annuity—the meat and potatoes of the annuities world—but there are ways to boost the payouts, such as laddering or sute a deferred-income annuity see Add an Annuity to Your Retirement-Income Mix. You have to eat, consume energy and buy basic necessities. Create a personalized strategy to maximize your lifetime income from Social Security. If your plan shows that you have a surplus, only then can you spend a little .

Don’t dump stocks

Financial instability ranks fifth on the list of Americans’ biggest fears about getting older, topped only by concerns about serious health issues, according to a survey of 1, adults conducted by Bay Alarm Medical. Concerns about financial instability were so serious, they actually beat out worries about both death of a spouse and one’s own death. If you’re worried about money, you’re right to be concerned.

A good starting point

Pre-retirees have k balances that are far too lowliving on Social Security benefits alone is all but impossible, and few employees today have employer-provided pensions uow guaranteed income. The good news is: There are ways to make your uour savings last longer, so you can make it through your senior how to make sure your money last in retirement without going broke. Here are six tips that can help you stretch your money. If you’re going to rely on Social Security koney provide a substantial amount of your retirement income, you may want to delay claiming it as long as possible. If you claim benefits before Full Retirement Age FRA — which is 67 if you were born after — your benefits will be reduced. If you wait to claim benefits, on the other hand, you’ll not only avoid those reductions but also potentially earn delayed retirement credits through age As you can see, you add a lot of money to your monthly Social Security income by waiting as long as you can afford to. Waiting doesn’t always make sense — if, say, you need to claim early because your spouse is going to claim benefits on your work history. But delaying is often a smart move, if you think you’ll live long enough to break even, and you want to maximize the income the Social Security Administration provides. One of the best ways to make your savings last as long as possible is maoe rely on them. If you earn an income from working ypur retirement, you can leave much of your money invested — although you’ll need to take required minimum distributions from pre-tax retirement accounts to avoid a tax penalty. There are a few caveats to you about working monye retirement. If you’ve claimed Social Security benefits before full retirement age and you mpney during the course of the year, your Social Security benefits could be reduced. And, no matter monsy old you are, if you work and earn too much money, you could end up pushing your income to the level where your Social Security benefits become taxable. While you need to pay attention to the impact working during retirement will have on your Social Security, there are plenty of benefits to continuing to mxke a job. Not only does it mean you can leave more of your savings invested and growing, but your job can also keep you connected with your community and keep your mind active.