How to Plan Ahead and Avoid Running Out of Money in Retirement

Many of us fear not having enough money saved to last through retirement. Will there be enough to cover basic needs, health care and the leisure time we have been looking forward to during our working years? Whether you are far from retiring or close, there are strategies you can use to help ensure your savings can last. Talk to your financial professional about the following approaches to see what might work for you.

1. Evaluate How You’re Saving

The ability to increase your savings boils down to two things: how much you can consistently set aside and how long you’re able to save. The longer you save, the more powerful the compound growth impact will be.

Evaluate your household spending and look for ways to make adjustments. Additionally, look at the instruments you’re using for your saving efforts.

Saving consistently starting as early as possible ranks as the most important, but also look at how you are saving. More conservative investments are appropriate for short-term time horizons, while others are built for long-term accumulating efforts.

Talk with your financial professional about your risk profile and time horizon to choose the best strategy for you.

2. Consider Delaying Your Social Security Benefits

Delaying these benefits means you’ll have a higher income floor of inflation-protected income once they start. However, delaying also means you may have to consume other retirement assets more aggressively, so understanding the big picture with the help of an experienced financial professional can be very useful.

3. Reassess Your Approach to Investment Management

As noted above, being too aggressive or too conservative with one’s retirement savings has its risks. Make sure you tailor the asset allocation approach to your income needs, both now and over time.

Additionally, many retirement savings vehicles can offer tax advantages that can lower the impact on your spendable income. For example, Roth IRA and Roth 401(k) contributions may not offer up-front tax benefits, but they offer tax-deferred growth and the ability to have tax-free withdrawals as long as certain requirements are met. Talk with a certified public accountant about the right tax advantages for you.

4. Implement a Retirement Spending Strategy

Try to limit the rate at which you will spend your retirement assets. Most retirees should consider limiting their withdrawals to no more than 3% to 5% of their portfolio each year.

Your COUNTRY Financial team can help you reach your financial goals, including retirement. Contact your representative to set up an appointment.

About the Author: Scott Jensen is a Certified Financial Planner™ and a Manager of Financial Planning Support for COUNTRY Trust Bank.

See more: How to Stay Afloat While Riding Through an Inflation-Impacted Reality