Tips to Keep from Running out of Retirement Money

One of the biggest fears in retirement is wondering if you have enough money so you won't run out. It is a scary thought to think you may grow old with no money to fall back on. A lot of people in the workforce don't have much in the way of retirement savings, and therefore should be worried. There are some things you can do now before you retire to plan for never having to run out of money.

Understand Safe Withdrawal Rates

The safe withdrawal rate is the rate at which you can draw your money from your retirement accounts with minimal risk of going bankrupt. The 4% rule is often considered a safe rate but you need to be mindful that every situation is different, and this rule may not best apply to you.

It is important to consider several factors that impact the safe withdrawal rate: age of retirement, portfolio asset allocation, risk tolerance, and economic factors. Understanding how these factors impact your safe withdrawal rate is a key step in determining how big your nest egg needs to be to fund your retirement. It also helps in establishing a budget in retirement instead of spending the money without a plan.

Invest in Assets

Dividend stocks are the simplest option for most investors. You can put together a portfolio of stocks with steadily increasing dividends and simply live off the payments those companies make to stockholders.

Another option is investing in real estate. Of course, with real estate, there may be more work required from you unless you plan to hire someone to manage rentals. Along with a management company comes money from your investment.

Buying an annuity is another option for getting money monthly. An annuity pays out a certain amount each month for the rest of your life in the exchange for a lump sum right now. This provides stability when you're retired but isn't the best return on your money.

Working

The great thing about retirement is you get to walk away from a career you've worked your entire working life and explore other options that you are passionate about. Not only does working during retirement increase your money but your lifespan also. In today's world, there are many opportunities to work a side job in something you enjoy.

Going into retirement with a plan for how to spend your nest egg or supplement your portfolio will be beneficial to you during retirement. You are less likely to spend all your money. It's never too late to start saving. Even a little is better than having none at all.