When we at AgingOptions talk with radio listeners and seminar guests, there’s one recurring question we hear more than any other: how can I make sure I don’t run out of money when I retire? While a small percentage of retirees have sufficient savings and investments to preclude money worries, the vast majority are facing retirement with significant financial uncertainty.
The Number One Fear: Going Broke in Retirement
Fortunately, there are financial management strategies that can help retirees allocate their resources in such a way that their money can last for the rest of their lives. This article that we discovered a few weeks ago on the USNews website provides what we think is some good basic advice. Written by retirement author Tom Sightings, the article includes seven strategies that retirees can follow to keep their retirement income flowing. “Running out of money is one of the biggest fears people have after they retire,” says Sightings. “But there are lots of ways to prevent outliving your savings and put your mind at ease in the process.” Before we share these tips, we should point out, based on our many years of experience, that all these ideas require discipline, honest self-assessment, and a solid plan. Unless you’re honest with yourself and determined to make a plan and stick to it, you may find yourself joining the ranks of frustrated, broke retirees.
This is also where a good financial dashboard can be an invaluable tool. Trying to plan your finances without having the right information in real time is like flying an airplane in the fog with no instruments! A financial dashboard, however, allows you to consider all your assets and helps you allocate them in a way that empowers you to achieve your financial goals. This versatile planning tool also lets you make adjustments quickly and easily as conditions change. We urge you to contact us at AgingOptions so we can discuss the benefits of a financial dashboard with you and then refer you to a highly qualified, objective financial planning professional who will help you build, maintain and utilize this powerful planning resource.
Seven Tips to Preserve Your Assets
Returning to the article, let’s review these tips to help keep the cash-flow flowing in retirement. Here’s the list of seven cash-preserving strategies from Tom Sightings in USNews.
- Withdraw a modest amount from savings each year. Some retirees are natural savers, while others can get carried away once they retire and start withdrawing too much too fast. “Take care to spend down your retirement savings gradually,” Sightings advises. Some suggest the “4 percent rule” as an annual withdrawal rate, but this may be too high: “You might run out of money if the economy turns bad or you live longer than expected.” A better approach is to follow the IRS required minimum distribution amount beginning at age 70 ½ (you’ll find a calculation table here).
- Invest in equity markets. Avoiding excessive investment risk in retirement is important, but playing it too safe can be a bad strategy. “If you are going to live another 20 or 30 years,” says the USNews article, “you need to grow your assets. So keep some portion of your funds in the stock market.” There are various ways to accomplish this, including low-cost index funds. Again, this is where objective financial advice really pays off.
- Don’t retire too early. If you have the option to keep working and delay Social Security, it’s generally a solid strategy. “Social Security is a kind of annuity,” says Sightings. “Benefits last a lifetime, increase with inflation and do not fluctuate with the financial markets.” The longer you wait to start payments (up to age 70), the more generous those “annuity payments” will be.
- Downsize as appropriate. Where and how you live has a significant bearing on how long your money will last in retirement. Choose a low-cost place to live and forego the big boat, the fancy car, the large house and the expensive vacations. You can have a delightful retirement lifestyle on a modest income by downsizing in stages as your finances, interests and abilities change over time, USNews
- Stay healthy. Many retirees are surprised to discover that the costs of health care are a lot higher than they were expecting. That’s why, in addition to buying the right insurance, it’s important that you take care of yourself. “Try to preserve your health by eating right and exercising regularly,” Sightings advises. You’ll feel better, you’ll live longer, and you’ll spend less.
- Rely on friends. We all know how important an active, supportive social network is to our sense of well-being, but being surrounded by friends and family can also save you money. “Friends help each other,” the article says, “whether it’s preparing meals, doing lawn care, sharing rides or trading off pet sitting.” The message: don’t hesitate to ask friends for a favor now and then, and then reciprocate when they ask you.
- Give some away. Generosity is therapeutic. “If it turns out that you have plenty of money in retirement, then share the bounty,” Sightings recommends. By giving to charity, or to your church, or to family and friends, your life will be enriched. And here’s another tip you should try: to make personal generosity even more fun, consider giving money anonymously. It’s a treat to give when your beneficiaries don’t know where that extra “financial blessing” came from!
Much More Than Money
As important as money is, there’s much more to retirement planning than finances. A truly comprehensive plan for your retirement future also needs to help ensure that you’re making the right housing choices, that you and your estate are well-protected legally, that you have the right kind of medical insurance, and that your family is supportive of your desires as you age. The only retirement planning tool we know of that does all this is a LifePlan from AgingOptions, and if you’ll invest just a little bit of your time, Rajiv Nagaich will gladly show you the power of this retirement planning breakthrough. Come join Rajiv at a free LifePlanning seminar at a location and time that works for you. You’ll find a complete calendar of currently-scheduled seminars on our Live Events page, where you can register for the LifePlanning Seminar of your choice.
As Tom Sightings writes, if you plan well, you can enjoy a financially sound retirement future. Another writer we recently quoted on the AgingOptions blog put it like this: “Those who have retirement plans in place have a happier, less stressful, and more financially secure retirement.” If that sounds good to you, come and learn about the benefits of an AgingOptions LifePlan. Age on!
(originally reported at https://money.usnews.com)