How to Make Sure You Don’t Run Out of Money in Retirement
Retirement is supposed to be one of the most stress-free and enjoyable times of your life. No longer having to work every day and finally having the time and money to enjoy your hobbies and interests, spend time with loved ones, and pursue your dreams are just a few of the benefits retirement has to offer. But retirement can also be an incredibly worrying time for many people. The most common concern retirees have is that their money isn’t going to last them through their retirement. Here are a few ways that you can make sure you don’t run out of money in retirement.
Buy Annuities for Guaranteed Income
One of the first ways that you can make sure that you don’t run out of money in retirement is to purchase an annuity. Annuities are a special type of investment where, rather than leaving your returns up to the swings and sways of the market, you receive a fixed, regular payment. There are several different kinds of annuities, with different benefits and risks, but they are a great way to get guaranteed income for life. Look into annuities if you want to know you will have regular income throughout your lifetime.
Another way that you can make sure you don’t run out of money in retirement is to keep your investments diversified. The more diverse your investment portfolio is, the more resilient it is against dips and drops in the market, helping serve as a store of value. One of the key things that diversity can help with is hedging against inflation. Precious metals such as gold tend to increase as the dollar falls. It can be tempting to move your investments into one area during retirement but staying diversified will keep your money lasting the longest.
4% Withdrawal Rule
The final way that you can make sure you don’t run out of money in retirement is to follow the 4% withdrawal rule. The 4% withdrawal rule is a basic concept that can, very safely, predict that your investment portfolio will last at least thirty years and perhaps if 50 years by only withdrawing up to 4% of your total value a year. This will allow you to keep your money long-term. Any withdrawals more frequent than this starts to leave your account susceptible to running dry.
Retirement can be an incredible time in your life. But to maximize your retirement and minimize your stress, you need to financially prepare. Follow these three tips to make sure that you have enough money to retire and don’t run out.
Check out this article on how to get a better deal on a home in retirement!