Managing Your Retirement Money

For years, your only concern was putting enough money into your retirement savings accounts. Now, you have to think about how much to take out! In this article, we show you the basics of withdrawing and using your retirement savings responsibly.

• Tip: Only withdraw 3-5% of your nest egg each year
  Consider how long you'll need to rely on your retirement savings before you start withdrawing money. If you retire at 60, you may need your retirement savings to last around 30 years. Most financial experts recommend that retirees start by only withdrawing 3 to 5% of their retirement savings each year. Ideally, if your investments are planned wisely, you should earn much of this back. Click here to calculate if your retirement income is enough to last your lifetime.
• Tip: Leave your tax deferred savings for last
  Use up your non-retirement savings and assets before you start withdrawing your tax-differed retirement savings. It's best to let your IRA and 401(k) accounts continue to grow until age 70.5, when mandatory distributions kick in. Early withdrawals can come with significant tax penalties.
• Tip: Downsize
  You can make your retirement money stretch farther by reducing your expenses. Consider downsizing by moving to a smaller home or to a less expensive area. You may also want to take on a part-time or consulting job in order to supplement your income and keep you active. Simply developing a detailed spending plan for each month can help you manage your retirement finances wisely.
• Tip: Consider an immediate annuity
  An immediate annuity can guarantee you a stream of income for the rest of your life. In order to buy an annuity, you give a lump sum of money to an insurer. In return, the insurer guarantees you a fixed amount of money each month. Combined with a balanced portfolio of investments, an annuity is a great insurance policy against outliving your nest egg. You should speak to a financial advisor before opening an annuity.
• Tip: Consider a reverse mortgage
  If you are "cash poor" but "equity rich," you may want to consider obtaining a reverse mortgage on your home. These mortgages guarantee you a set amount each month for the rest of your life. Read more about the pros and cons of reverse mortgages. You should speak to a financial advisor before opening a reverse mortgage.
• Tip: Work with a trusted financial advisor
  Each person's situation is unique. The best way to make the most of your retirement money is to work closely with a trusted financial advisor. Such a professional can help you decide how to withdraw your savings so that you'll have a comfortable amount to last you through your retirement.

With a little planning and some financial advice, you should be able to enjoy your "golden years," without money worries!