How to Ensure Your Lifestyle Lasts Through Retirement
Americans approaching retirement in the 21st century face a growing number of fears. Money is one of the biggest fears on that list for most Americans, with the Motley Fool reporting that more Americans fear running out of money during retirement more than they do death itself! Some 57% have reported fearing a lack of funds more than death. It is not an issue facing only older Americans though. Time.com points out that 1 in 3 Americans have no savings set aside for retirement. Whether retirement is around the corner or still a few decades away, what can you do now to ensure your lifestyle lasts through retirement?
It's Easier than You Think
While it might seem daunting, it might be easier than you think to extend your lifestyle through retirement. There are a variety of steps you can take to make sure that your retirement savings lasts throughout your retirement, and it starts with proper planning in advance. Extension.org offers the following tips to keep in mind:
• Plan for a long retirement: Keep longevity in mind and realize that retirement can now last 25 to 30 years for many people.
• Prepare a retirement spending plan: Before you reach retirement, think about how much of your lifestyle you want to maintain and what you will spend your money on.
• Follow your investment plan: If you've got a plan in place, stick to it!
Try the 6% Solution
There are a number of figures that analysts throw out to help retirees determine how much of their money to spent during retirement. You should be saving 12 to 15% of your income each year as you approach retirement to set aside enough money, but how much should you spend during retirement? Depending on the health of your investments, consider using a 6% withdrawal rate to ensure you can still enjoy your retirement without drawing it down too much and shortening its lifetime during your retirement.
Be a Flexible Spender
No two years of retirement are certain to test your finances in the exact same way. It is important to be a flexible spender. Your retirement is a period of life you have worked hard to enjoy, so it is important not to deprive yourself of enjoyment and experiences. However, it is equally important to keep in mind that you might need to be flexible in your spending, both during retirement and in the years leading up to it. Try to cut back on expenses later in your working life, so that money can be redirected toward your investments to further boost your accounts before you retire. Once you have retired, a flexible approach to spending can reduce the withdrawal on your accounts and make sure your money lasts longer.
Keep Social Security in Perspective
As the situation exists today, Social Security is still here for retirees. The New York Times points out that Social Security has benefits that rise with inflation, provide survivor's benefits to married couples, and allow you to either withdraw early at 62, on-time at 65, or even delay collections until you are 70. Keep Social Security in mind as you plan for retirement and determine which withdrawal age will benefit you the most and insulate your investments against withdrawal that is too fast.
A financial advisor at Hughes Warren can help you navigate these tricky issues and set up an investment plan that provides for the entirety of your retirement.