How can someone effectively plan for retirement so they don’t run out of money?
To give you confidence that you won’t run out of money during retirement, we asked financial experts and business consultants this question for their best advice. From opening a Roth IRA to investing in real estate, there are several tips that may help you effectively plan for retirement so that you don’t run out of money.
Here are nine retirement planning tips to avoid running out of money:
- Double-Check Your Policy
- Start as Early as Possible
- Plan for Inflation and Extra Expenses
- Open a Roth IRA
- Consider Time and Resources
- Find Passive Income Investments
- Invest in Real Estate
- Review Your Company’s 401K Plan
- Work With a Retirement Advisor
Double-Check Your Policy
One of the first things you want to do before retiring is to ensure that your life insurance policy is still active. You also want to determine if you would still be able to maintain your policy with your retirement income and savings. The last thing you want is to have your life insurance policy lapse especially at a time when you need it most. It is also more expensive to get a new life insurance policy later in life, so plan accordingly.
Chris Abrams, Abrams Insurance Solutions
Start as Early as Possible
It is never too early to start planning for retirement. Start investing in a retirement savings account with your first job and continue right up until you retire. By consistently investing and diversifying your 401K investment portfolio, you should never have to worry about running out of money especially when you need it most. Simply saving your money in the bank is not good enough. If you have the option, take advantage of your company’s 401K match. But if that’s not an option, start your own IRA and contribute as much as possible as early as possible.
Rronniba Pemberton, Markitors
Plan for Inflation and Extra Expenses
One wise way to plan for retirement is to calculate the money you’ll need while adjusting for inflation and then buffer that amount by an additional 20-25%. It’s almost impossible to calculate how much you’ll truly need, but a good rule of thumb is to anticipate that you’ll need more than you expect. Be generous with yourself, not so much to live in opulence and luxury, but rather to wisely predict that you might live longer, health care expenses might be higher, or inflation could rise in your golden years, too. Thus, in addition to the standard day-to-day costs, it’s wise to look beyond the obvious and expect many miscellaneous costs which may materialize in the future.
Anna Berkolec, ResumeLab
Open a Roth IRA
Not every first “real” job offers a retirement plan, like a 401k. The best advice I can give is as soon as your paycheck covers your bills comfortably, open up a Roth IRA and start putting away money. It is a tax-free way to grow your money and to withdraw the money as well. You could put as little as $100 a month away. Getting used to putting money away is good habit building and can help you understand how retirement savings work.
Bailey Mosley, Pedal Haus Brewery
Consider Time and Resources
I have helped clients plan for retirement for nearly a decade. The most important factor is time, because it is never too early to start saving. Start as soon as you can and don’t stop. The power of compounding interest is amazing. The higher wage earner in a couple should delay social security as long as they can, ideally to age 70. If you have a pension, look into the options on annuitizing and plan for the guaranteed amounts you’ll receive (ie. Social Security, pension, and annuity). It is also pertinent to know what your monthly expenses are and if those will change in retirement. The monthly need is crucial to solidify. We can then see how much is guaranteed and what the gap is, we then need to assess how much income we can pull from investments to fill that gap while also taking into consideration taxes and inflation. It is important to work with a professional who can assess your individual situation and offer customized advice.
Alison Stine, Stine Wealth Management
Find Passive Income Investments
Plan for your retirement early and with solid passive income investments. You want to make sure that you have good investments that can still bring you income when you are retired. This way you will have a little extra on top of what you have already saved up for retirement. This method will also help you avoid running out of money during your retirement.
Tri Nguyen, Network Capital
Invest in Real Estate
One of the best ways to prepare for retirement is by investing in real estate. Real estate investing has the power to create passive income streams that do not require your active involvement as a 9-5 job would. The monthly income real estate properties generate can offset investors’ expenses and put money back in their pockets. Over time the initial money the investment took is made back, and a positive return is seen. The passive income that each investment generates allows successful investors to control their time and choose to live the lifestyle and retirement they desire.
Than Merrill, FortuneBuilders
Review Your Company’s 401K Plan
A person can effectively plan for retirement so they don’t run out of money by starting their 401 (k) plan. Many businesses offer their employees a 401(k) plan, which is something every person needs. Some companies even match your contribution, so if your company offers that, make sure you are depositing an amount they can match you on. Setting money aside for your 401(k) can provide an effective retirement because it is money being pulled from your paycheck without taxes being taken out. Therefore, it is important not to touch any money in your 401(k) so that it can be properly used and saved for retirement purposes. In the end, a little investment in your 401(k) will go a long way for your retirement.
Jacob Dayan, Community Tax
Work With a Retirement Advisor
A great way to plan for retirement so as not to run out of money is to set up a plan with the help of a professional retirement advisor. They can help you write down a thorough plan that factors in inflation, your Social Security benefits, and other monthly income to exactly what you’ll need to make your money work for you during retirement. Just thinking of retirement can be scary for a lot of people, so taking the time to work with a professional in that area can do a great deal to alleviate those fears.
Shaun Price, MitoQ