One of the biggest fears soon-to-be retirees have is that they won’t have enough money to last them throughout their retirement. And rightly so — with concerns surrounding inflation, recessions and a volatile stock market, over half of Americans feel behind on their retirement savings, according to a Bankrate poll. These fears may keep them from taking the plunge and quitting their jobs once they hit retirement age, or they may delay retirement for years or perhaps even indefinitely.
However, with an intentional plan and the right support in place, you can retire comfortably — and confidently — at the age you choose. To provide some guidance on how to prepare, seven financial experts from Kiplinger Advisor Collective discuss their top tips for soon-to-be retirees looking for ways to make their savings last throughout their retirement and banish their fears of not being able to survive financially.
Get a financial professional in your corner
“I like to advise that they consult with a financial planner who can help them lay out their options based on all of their assets available. Then, they can decide on when to use each asset in order to maximize how long it will last. By having a financial professional in their corner, people can worry less about how they are going to get by and can focus more on making the most of their retirement.” — Angela Ruth, Due
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Live within your means
“There are many things that clients can do to make their money last throughout retirement. The one thing that clients can control is their living expense level. Living within your means — where you only live on the income you make and don’t take money from the investment principal — can make someone's money last much longer.” — Mario Hernandez, Longevity Wealth Management
Find income-producing hobbies
“Imagine your retirement capital like a bucket holding financial resources. To make it last for decades, consider two key aspects: being intentional about what flows out (distributions) and finding creative ways to counter the outflows (additional income). Today, there are more retirees than ever performing income-producing hobbies and side jobs, supported by their ability to work remotely.” — H. Adam Holt, Asset-Map
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >
Trade down to avoid sacrifice
“Inflation is one of the great enemies of those on a fixed income (or no income). Develop an understanding of different options at different pricing tiers and budget retailers, of the extra price we pay for brand and convenience and a grounded sense of what trade-offs you're willing to make. Assuming no financial windfalls come in, reasonable trading down could mean saving without sacrificing (much).” — Robert Ribciuc, EBITDA Catalyst
Map out your 'essential' and 'variable' expenses
“First, I encourage clients to categorize their expenses as core (or essential) and lifestyle (or variable). I try to help them match their essential expenses with their sustainable and predictable sources of retirement income. Next, I look at their variable expenses. We then can determine a safe withdrawal rate. This exercise helps clients feel more engaged, confident and empowered.” — Marguerita Cheng, Blue Ocean Global Wealth
Create a detailed monthly budget
“They should review any expected retirement costs and create a monthly budget. They should also review all of their assets to see which ones would make sense to sell. Next, they should add up how much they have between their investment portfolio and any other accounts. Then, they should create a plan on how to apply everything they have to their monthly budget to make it last as long as possible.” — Justin Donald, Lifestyle Investor
Think of your home equity as a tool
“Retirees should consider their current home equity and their living situation goals they have in their financial assessment. If they have a lot of equity, they could choose to sell their home and downsize into a smaller home, pocketing the cash for spending needs. They could get a reverse mortgage or home equity loan if they want to stay in their current home but need more cash for expenses.” — John Bodrozic, HomeZada
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Disclaimer
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation
FAQs
The $1,000-a-month retirement rule says that you should save $240,000 for every $1,000 of monthly income you'll need in retirement. So, if you anticipate a $4,000 monthly budget when you retire, you should save $960,000 ($240,000 * 4).
What is the $1000 a month rule for retirement? ›
The $1,000-a-month retirement rule says that you should save $240,000 for every $1,000 of monthly income you'll need in retirement. So, if you anticipate a $4,000 monthly budget when you retire, you should save $960,000 ($240,000 * 4).
What are the 7 steps in planning your retirement? ›
7 key steps for retirement planning
- Start as early as possible. ...
- Be clear about what your retirement goals are. ...
- Create a savings plan and build it up. ...
- Factor in longevity and inflation risks. ...
- Choose the right investment products. ...
- Review your retirement plan regularly. ...
- Protect yourself and your family.
If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can. Your taxes will be lower, your company may kick in more, and automatic deductions make it easy. Over time, compound interest and tax deferrals make a big difference in the amount you will accumulate.
How do I ensure I have enough money for retirement? ›
Retirement Expenses
One well-known method is the 80% rule. This rule of thumb suggests that you'll have to ensure you have 80% of your pre-retirement income per year in retirement. This percentage is based on the fact that some major expenses drop after you retire, like commuting and retirement-plan contributions.
Can you live off $3000 a month in retirement? ›
That means that even if you're not one of those lucky few who have $1 million or more socked away, you can still retire well, so long as you keep your monthly budget under $3,000 a month.
How much does the average retired person live on per month? ›
Average Retirement Spending
According to the Bureau of Labor Statistics (BLS), the average income of someone 65 and older in 2021 was $55,335, and the average expenses were $52,141, or $4,345 per month.
What are the 3 R's of retirement? ›
Three R's for a Fulfilling RetirementRediscover, Relearn, Relive. When we think of the word 'retirement', images of relaxed beachside living or perhaps a peaceful cottage home might come to mind.
What is power of 7 retirement? ›
How much do I need to retire? 7 X your household income. With saving milestones to get you there.
What are the 7 crucial mistakes of retirement planning? ›
7 common retirement planning mistakes — and how to avoid them
- Expecting the government to look after you. ...
- Counting on an inheritance. ...
- Not having an estate plan. ...
- Not accounting for healthcare costs. ...
- Forgetting about inflation. ...
- Paying more tax than you need to. ...
- Not being realistic. ...
- Embrace your future.
As a result, an oft-stated rule of thumb suggests workers can base their retirement on a percentage of their current income. “Seventy to 80% of pre-retirement income is good to shoot for,” said Ben Bakkum, senior investment strategist with New York City financial firm Betterment, in an email.
At what age do most people retire? ›
While the average retirement age for workers in the United States is 64, that number varies as a result of many factors, including your Social Security benefit, your retirement savings, any pensions you might have, and even the lifestyle you want to live in retirement.
Where is the safest place to put your retirement money? ›
Below, you'll find the safest options that also provide a reasonable return on investment.
- Treasury bills, notes, and bonds. The federal government raises money by issuing Treasury marketable securities. ...
- Bond ETFs. There are many organizations that issue bonds to raise money. ...
- CDs. ...
- High-yield savings accounts.
As a general rule, the end of the month is good for those with pensions, as those often start on the first day of the month after retirement. In this scenario, retiring on the 31st means that you won't have a gap in pay.
What is the best state to retire in 2024? ›
Florida has regained its status as the best state for retirees in 2024. That's according to WalletHub's latest “Best and Worst States to Retire” study. In 2023, Virginia took the top spot and knocked Florida down to No. 2.
How do I ensure I don't run out of money in retirement? ›
To avoid this, it's crucial to establish a sustainable withdrawal rate. We recommend doing this with the help of a professional, who can use cashflow modelling for greater accuracy. It's also important to review your forecast at least once a year to ensure you have plenty left.
Can I live on $2000 a month in retirement? ›
“Retiring on $2,000 per month is very possible,” said Gary Knode, president at Safe Harbor Financial. “In my practice, I've seen it work.
How long will $500 I last in retirement? ›
According to the 4% rule, if you retire with $500,000 in assets, you should be able to withdraw $20,000 per year for 30 years or more. Moreover, investing this money in an annuity could provide a guaranteed annual income of $24,688 for those retiring at 55.
What is the maximum social security benefit? ›
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
What is the 3 rule in retirement? ›
A 3 percent withdrawal rate works better with larger portfolios. For instance, using the above numbers, a 3 percent rule would mean withdrawing just $22,500 per year. In this case, you may need additional income, such as Social Security, to supplement your retirement.
