4 Ways To Make Your Retirement Savings Last a Lifetime

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As you’re nearing or entering retirement, you may be worried about not having enough money to last the rest of your life. After all, people are living longer than ever, and the last thing you want in your golden years is to have your funds run out.

To that end, GOBankingRates spoke with Regina McCann Hess at Forge Wealth to help you keep your retirement money going strong as long as you are.

Adopt a Sustainable Withdrawal Strategy

The first step to take as you enter retirement is to ensure your withdrawal strategy is a sustainable one. However much money you have in your portfolio, you want it to continue to make money for you as it earns interest and pays you an “income” for the duration of your life.

McCann said, “A recent withdrawal strategy that many professionals tend to use is 3.5%. This can provide a distribution rate that may be sustainable for your portfolio to support.”

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In short, you’ll withdraw 3.5% of your portfolio each year for income. That strategy means your entire portfolio should stay strong as you age. Some experts advise different percentages — another common plan is to withdraw 4% each year — so it’s a good idea to do the math or consult with a financial advisor to plan the best strategy for your savings.

“You could be in retirement, living off your portfolio for over 30 years!” said McCann.

Diversify and Rebalance Your Portfolio

Now, how do you keep your portfolio growing gradually over the decades? McCann suggested diversifying your portfolio by investing in “a little bit of everything and not too much of one thing.” In other words, don’t keep all your eggs in one basket.

When you diversify, “take your gains and redeploy them to other areas of your portfolio, helping reduce your risk in the long-term,” she said.

So, you’ll want some blue-chip stocks, some high-growth stocks, some bonds, some index funds and more. Talk to your financial advisor about the best ways to diversify your portfolio based on your specific needs.

Delay Social Security Benefits

Another thing McCann suggested is delaying your Social Security benefits. Many people still don’t realize that claiming your Social Security income at the earliest possible age, 62, will decrease your lifetime benefits by as much as 30%.

McCann said, “It makes more sense to wait until at least 67 … to turn on your Social Security. The highest amount is paid for those waiting until age 70. You will receive about an 8% increase per year while waiting to initiate your benefit.”

So, delay taking your Social Security benefits as long as you can to maximize your earnings, especially if you’re still working at 62. Then, when you do claim, your retirement income will be much larger, allowing you to relax into your golden years.

Manage Lifestyle Expenses

Finally, before entering retirement, sit down and budget your weekly, monthly and annual expenses. You’ll be on a fixed income, so you want to create a predictable expense sheet. That way, you won’t get caught unawares and lose money or have to make a larger withdrawal than you were planning for.

McCann explained, “This means that there may be times when you must reevaluate your wants and needs list. You need to revisit your plan one to two times per year and determine if you are still on track.”

Furthermore, don’t forget to consider your healthcare expenses as you enter the later years of your life. McCann said, “We may have an idea about Medicare premiums, but when a health event occurs, the cost can be staggering. A good approach for this could be to factor some type of additional healthcare expense into your annual budget.”

Sit down and consider a long-term care plan, in-home help or a nursing home. If these needs come up, you’ll want to be prepared to pay for them.

In the end, you can be smart and strategic with your retirement funds, so you’re prepared for any eventuality. Whether you live a long, healthy life and travel the world or retire in a nice nursing home, your money can cover it all if you sit with your finances and your financial advisor and get prepared.

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