There’s lots of things to consider for your future retirement, but one of the fears many soon-to-be-retirees have is that they may outlive their money. In fact, 77% of seniors are more afraid of running out of money than dying.
This is obviously a huge concern for financial educators like ourselves as well. So how do you make the right financial decisions so that this doesn’t occur? Here are some steps we recommend you can take now to safeguard a better future for yourself and your loved ones:
1.Develop a Standard Budget
This sounds obvious, but you’d be surprised how many people enter retirement without a clear picture of their monthly fixed income and expenses. It’s absolutely critical that you sit down and do the math (p.s., we can help with that) to find out how long your money can stretch, and at what income level. And if possible, you should do this several years before you officially leave your job, that way if it looks like you may come up short you can take some actions to correct it.
In addition to the standard budget, you should draw up non-standard budgets for a few different scenarios. What happens if a major expense comes up you didn’t expect, or that your health bills continue to expand? Or, on the opposite side of the spectrum, what if your cost of living is actually less than anticipated? Doing this sort of outline can let you see any holes in your retirement. Thinking about these possibilities now will help you in the future.
2. Consider an Annuity
There are many different kinds of annuities that have many different rulesets, but they all have the same basic setup. Buying an annuity involves partnering with an insurance company and delivering a lump sum payment to them. In return, they will invest that money on your behalf, and when your retirement kicks in, will then send you a steady stream of payments to live off of. In addition, you do not have to pay taxes on annuities, which can make them much more attractive than typical stock investing, and you’re guaranteed a certain sum of money no matter how the market performs.
Of course, annuities can get far more complicated than that, and we’d encourage you to take one of our educational courses to help you better understand the risks/rewards of doing this, but it is a valuable option for creating a consistent revenue stream if you’re worried about burning through your money too quickly.
3. Consider delaying social security
If you can afford it, it may be smarter to delay social security, either by working longer or by simply not taking it out until it reaches it’s maximum payoff. Many people retire early and lose out on some of their social security benefits, and even those who retire at the typical age of 65 and start collecting do not have all of their benefits. By delaying your payout, you can maximize the amount you take home each month and stretch your income for longer. While this certainly isn’t an option most people enjoy, it is a simple, practical way to safeguard your money for longer.
If you’re worried about the possibility of not having enough money to last through your golden years, give us a call today and we help you learn more about your financial situation and the options available to you.