Some Tips on How to Not Run Out of Money During Retirement
Many people have a fear they will run out of money during retirement, and when that happens they’ll be unable to make any source of income to keep them afloat. This is a very real fear, and it does happen. But there are many ways you can help to fight against this possible. Today we have some solid tips on how to not run out of money during your retirement years.
The 4% Rule
This rule refers to only using four percent of your retirement savings value at the beginning of retirement. Then, as the years pass by, you adjust that amount based on the new year’s inflation. This will help your savings to last about 30 years, which should do well for most people’s retirement. For example, if you manage to save $10,000 you would withdraw $400 a year to live off on top of any income sources you have like social security or a pension. If you manage to save $100,000, you would withdraw $4,000.
You’ll want to take some of your savings and put them into investments that will slowly make you money as your retirement progresses. A mix of stocks and bonds, preferably halved, is a good plan. Another idea is to invest savings into a profitable local business where you’re a silent partner, thus accruing income without having to do anything. The last plan is only feasible for those with a decent amount of savings to begin with, however. One idea many people have begun looking into is real estate. This is something you’d want to begin pursuing pre-retirement. With the purchase of one or two moderately priced rental units, you could generate a small but steady income for an indefinite amount of time.
Remember that the key to financial security is flexibility and diversity. Don’t put all your money into one thing and have a backup plan should something happen to a portion of your retirement income. Perhaps one year your stocks build a lot of value which can be used while your nest egg sits untouched. Or maybe you need a little extra from your nest egg during a year where a business you invested in doesn’t generate as much income. Always be ready to switch up the plan just a little.
Think About Work
If you are retiring in relatively good health, you may want to think about working. While this seems totally against what retirement is about there are many different options. This also helps give you something to do. Options to investigate include freelance work, where you work from your home, an easy part-time job, or even consulting work.
Before getting a job or earning extra income, however, check with current social security limits. While retirees can work for supplemental income, it is limited to a certain amount before you become ineligible to receive your SSI payments. This amount varies each year, and might change based upon your state.