For most Americans who are saving for retirement, the greatest fear is outliving their money — running out of funds while still alive. Do you also worry about this common, and very understandable, anxiety? If so, consider how these five steps can help alleviate this fear.
1. Add Annuities to Your Plan
Pensions were designed to provide guaranteed lifetime income. However, many Americans don't have access to a pension plan anymore. You can, though, craft your own with the use of annuities. How? Purchase a private annuity with a lump sum of funds. Then, either immediately or at a later date, the purchaser begins receiving monthly checks at agreed-upon terms — possibly a lifetime paycheck.
2. Learn to Run Scenarios
Scenarios are a great way to test out the effects of different choices on your goals. You can use these to test the results from more aggressive investments versus less aggressive ones, to test various retirement dates, or to determine if you will meet projected monthly expenses. Scenarios can be relatively simple, but you may need to adjust many factors that work best when done with a financial retirement planner.
3. Work With a Professional
One of the best choices you can make to shore up your retirement planning is to work with a financial planner. These are trained professionals who understand things like actuarial planning, risk/reward balance, and the complexities of various retirement vehicles. They are also impartial voices who can help you realistically assess your strategy and make positive adjustments.
4. Don't Let Your Credit Go
Retirement planning's foundation is a healthy retirement savings account. But don't overlook the role of good credit as a backup plan. If you do run short during retirement, your pre-established sources of credit could be a life-saver. Because it may be harder to get new credit once you retire, get your credit in order now. Clean up your credit. And apply for higher limits and things like home equity lines of credit in advance.
5. Consider Phased Retirement
You can stretch out your funds even more by taking on a phased retirement approach. This prevents you from tapping all your money in the early stages of retirement. For instance, build up a side gig into a reliable source of income and then retire from your main full-time job. The side gig will help you avoid taking Social Security early, which boosts monthly checks for life. Finally, draw from retirement accounts when you tire of your side gig.
Where to Start
Want more targeted tips for making your retirement money last for your entire lifetime? Start by meeting with an experienced financial planner who specializes in retirement today. Together, you can create a plan that will allow you to retire with confidence. Contact a retirement financial planner for more information.