"Saving for retirement was easier in yesteryear, when many workers had pensions to look forward to and lived shorter lives, requiring less in the way of retirement savings." This is no longer the case so more careful planning is needed for retirement.
In 2016, very few folks have pensions, and life spans have lengthened. The issue is how to make your money last through your entire lifetime. The Motley Fool’s article “3 Easv Moves to Make Your Money Last Your Lifetime” has three suggestions.
- A great way to be certain your nest egg lasts as long as possible is to decrease your monthly expenses. A big cost is housing so it’s a good idea to pay off your mortgage early, especially before you reach retirement age.
- You can also take some of your retirement nest egg and use it to buy an Immediate Annuity. An Immediate Annuity takes the lump sum you invest up front and converts it into a stream of monthly payments. You will have several options on how long those payments last. Converting all of your money to an Immediate Annuity is risky. Once you've bought an Immediate Annuity, you generally can't touch your initial lump-sum investment. You want to hold on to some of your nest egg so you have access to cash if you need it for unexpected expenses.
- Finally, another great strategy to make your money last longer may not be very appealing, but it's quite powerful. You can work longer. If you're planning to retire at 62 or 65, consider working a few more years, which can be a big benefit. You keep saving and investing money for retirement, so you put off drawing from your nest egg, making it bigger. Delaying retirement can also be beneficial with Social Security as the later you start collecting up to age 70, the larger your ultimate checks will be.
Reference: The Motley Fool (April10, 2016) "3 Easy Moves to Make Your Money Last Your Lifetime"