Worried You’ll Run Out of Money in Retirement? 3 Moves to Make

There are a number of aspects of retirement you might find daunting. The idea of not showing up to work every day might be unsettling. And having to get used to Medicare instead of employer health insurance could throw you for a loop.

But if there’s one thing that tends to scare retirees universally, it’s the idea of running out of money. And unfortunately, there’s no single savings balance that guarantees that won’t happen.

You could retire with $10 million, and if you’re not careful, it could all be gone at a time when you still have many more years to live. Granted, that’s less likely to happen than if you have, say, $800,000. But it’s possible.

That’s why it’s important to take steps to avoid running out of money. Here are a few worth focusing on.

1. Delay Social Security

You monthly Social Security benefit is available to you in full once you reach full retirement age (FRA). If you were born in 1960 or later, FRA kicks in at 67.

But did you know that Social Security will reward you financially for holding off on filing? It’s true. For each year you delay your claim past FRA, up until age 70, your monthly benefit grows 8%.

If you’re worried about running out of money in retirement, delaying Social Security makes sense. The more money you get each month from Social Security, the less you’ll have to dip into your savings to cover ongoing expenses.

2. Establish a smart withdrawal rate for your savings

Managing retirement savings can be confusing for one key reason. A lot of people retire with a few million dollars. And when they see such a large balance, they tend to assume that they don’t have to be careful with how much they withdraw.

That’s a mistake that could cause you to run out of savings, though. A better bet is to work with a financial advisor to establish a smart withdrawal rate for your money.

Some experts might suggest using the 4% rule, which has you removing 4% of your savings your first year of retirement and adjusting future withdrawals for inflation. But the 4% rule has fallen out of favor in recent years, due largely to changes in bond yields and other economic factors.

That’s why it’s a good idea to see what withdrawal rate a financial advisor suggests based on your specific asset mix, expenses, and life expectancy. With the right strategy, your savings may be safer than you’d think.

3. Work part-time

A lot of people go into retirement thinking they’ll never work again. But if you’re concerned about depleting your savings, you may want to get a part-time job. Just as having a larger Social Security benefit means having to take less money out of your savings each month, so too could working put less pressure on your nest egg.

If the idea of working part-time in retirement seems unappealing, do remember that it could look different than what you’d expect. Rather than take a job that requires you to report to an office and sit at a desk, you could find something creative to do for money. Or, you could start your own business.

The nice thing about retirement is that it gives you an opportunity to explore working arrangements that weren’t feasible earlier in life. So whether it’s operating your own food truck or starting a guitar school, there are many choices you can look into for generating income that you may find fun and fulfilling.

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