Retirement Planning

5 Tips to Help Money Last Until You’re 100

Every year I like to read the results of the “Retirement Confidence Survey” which aims to gauge the views and attitudes of working and retired Americans regarding the various aspects of retirement. Of all the questions in the survey (34), I tend to frequently quote the results of one. Of the current workers surveyed, only 23% feel “very confident” that they will have enough money to live comfortably throughout their retirement years1. While that is a higher percentage of respondents then last year, it’s still a very low number. We aim to increase confidence through planning!

Here are 5 parts of retirement planning that we believe will help increase your confidence that you won’t outlive your money, with a couple different results of the survey sprinkled in for perspective.

  1. Keep earning money, even if it isn’t at your primary job – 74% say they plan to work in retirement, but only 28% of retirees surveyed said they actually worked for pay. Be a part of the 28%. Drive for Uber so you have social interaction and a flexible schedule. Do contract work on projects that interest you. Become an administrative assistant for local charity that badly needs the help. Know that while you are restricted on what you can earn on while on Social Security prior to full-retirement age, you can earn whatever after. Earning a little money can go a long way to keeping your portfolio in a good place for longer.
  2. Watch your withdrawal rate – You’ll need to supplement earned income, Social Security and perhaps a pension (if you have one) by tapping into your savings – 69% of retirees say their savings is a major part of their income. But be careful about how much you take out, especially early in retirement. 3%-4% is generally considered the “safe” rule of thumb. You’ll need to customize your plan, but note, dipping into principal is like killing a goose laying you golden eggs. You forever forgo the eggs that goose may have produced so be careful about your consumption.
  3. Keep money in the market. It’s easy to say “this is all I have” and get too conservative with your investments. You will NEED to keep up with inflation and taxes though, especially as health expenses go up. We use a “three bucket theory” to make sure you have assets earmarked for long-term growth at all times, without having to rely on those assets any time soon. Having cash and conservative buckets too, should allow you to withstand the ups and downs of the market in your long-term bucket during retirement.
  4. Know your expenses. There are needs, there are wants, and there are wishes. And you should have a bucket of money for unknowns too. Yet only 42% of pre-retirees have tried to figure out what they will need in retirement. Success in life comes from spending less than you make and saving the difference. Retirement is no different. So know what you need to spend and make sure your fixed income + the 3%-4% withdrawal rule will work over time.
  5. Resist the urge to help more than you can afford. Loved ones may need help. In fact 30% of respondents say they have provided unpaid care for loved ones. But many of those caregivers also admit it adversely affected their own finances. Try to plan ahead for these unknowns by knowing your options and your limits.

While there are no guarantees in life, other than taxes and dying, attention to these 5 parts of your retirement can only help your potential for making money last – perhaps until you’re 100!

Tracking # 1-869418

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