Even if you’ve worked hard to save for your retirement, you’re still likely to have some concerns about whether you’re saving enough. Much of the uncertainty comes from the fact that you simply don’t know how long you and your spouse will need to draw upon your retirement savings. It’s therefore important that you have a plan for how you’re going to make your retirement savings last as long as possible.
Running out of money during retirement is something that no one wants to face. Regardless of whether you’ve already retired, or retirement is still a few years away, there are many things you can do to make your money last longer.
Here is some retirement advice you can use to help make sure to get the most out of your savings.
Scale Back Your Lifestyle. While this certainly isn’t what any retiree wants to hear, one of the most effective ways to make your retirement savings last longer is to scale back to a more modest lifestyle once you stop working full-time. There are a number of ways to do this, of course, including moving into a much smaller home (and reducing your housing expenses), moving to a state (or perhaps even overseas) where the cost of living is significantly less or simply taking a hard look at which expenses in your life are truly necessary, and which you can do away with.
Select Income Sources Appropriately. There’s a good chance you have multiple retirement savings accounts in your portfolio. Many new retirees have one or more 401(k) accounts, traditional IRAs, Roth IRAs, Social Security and possibly even a company or government pension. Be strategic in which accounts you access first in order to reduce the hit to your overall portfolio.
Delay Taking Social Security. The decision on when to begin taking Social Security benefits will likely be one of the most significant choices that many individuals will make with respect to their retirement funding. For most new retirees, the age to begin receiving full Social Security benefits is between 66 and 67. But individuals may elect to start receiving benefits as early as age 62, although the downside of doing so is that the Social Security benefit they’ll receive for the rest of their lives will be lower than if they waited until full retirement age. On the other side of the coin, an individual who waits even longer (up to age 70) to begin collecting Social Security will receive an amount that’s greater than they would have received starting at their full retirement age.
Work Part-Time. It’s a common complaint among some retirees that a life of playing golf all day isn’t quite as interesting or enjoyable as they dreamt it would be. Particularly for retired individuals who are living alone, the idea of continuing to work throughout retirement is becoming increasingly popular. From a purely financial perspective, even if the part-time job is only one or two days a week, that extra money (combined with the fact that you aren’t out spending money during the times that you’re working) can help a retiree make ends meet and make their savings last longer.
While there are a number of different strategies for making your retirement savings last for the rest of your life, the most reliable approach is to make sure that you have as much as possible saved up in the first place. Do everything you reasonably can to maximize your tax preferred contributions each year, and make sure you take full advantage of any employer 401(k) matching program.
Tags: retirement advice, retirement money, retirement withdrawal