Broker Check
Will Your Retirement Savings Last?

Will Your Retirement Savings Last?

February 16, 2024

Will Your Retirement Savings Last Your Lifetime?

During periods of challenging economic forecasts, market volatility, and potential government shutdowns, even the most composed retirees can be anxious about the future. With the S&P 500 and Nasdaq experiencing losses of more than 7.5% during August and September, the need for strategies to secure your financial well-being for the long haul is crucial. Here, we'll explore some practical ways to help your money last.

Revisit Your Financial Plan: If you're concerned about outliving your savings, the tried-and-true method of revisiting your financial plan is a solid recommendation. Taking control of your financial situation can significantly reduce stress and uncertainty. The best financial plans and projections incorporate taxes, inflation, and various scenarios you may experience during retirement.

Manage Your Spending: Consider yourself fortunate if your fixed retirement costs, such as housing, utilities, food, and transportation, are covered by Social Security, pensions, rental, or dividend income. This financial stability allows you to adjust your variable spending on items such as travel and dining out if your plan suggests spending less. If your bills find you consistently exceeding your portfolio income and reasonable withdrawal rates, it's wise to scrutinize your expenses and spending habits. Make necessary adjustments to avoid running out of money in retirement.

Combat Inflation: Inflation has increased over the past few years. To preserve your purchasing power, seek investments that can outpace the inflation rate on an after-tax basis. For instance, current yields on a one-year Treasury bill were 5.46% last week., compared to the latest annual inflation rate of 3.7%. If inflation holds at this level over the next year, the one-year Treasury in a taxable account will keep your purchasing power intact, provided your federal income tax bracket is less than 32%. As an aside-be cautious about investments with exceptionally high yields, as they may come with hidden risks. Research the credit quality of such investments and consider professional advice.

Explore Part-Time Work: If you face financial shortfalls in retirement, don't hesitate to explore part-time work opportunities. Besides the economic benefits, working part-time can provide essential social interaction and help alleviate stress during uncertain times.

Portfolio Allocation: Portfolios that incorporate a mix of stocks, bonds, alternative investments, and cash tend to deliver better results over the long term. Investigating options outside of a traditional stock and bond mix can help weather market fluctuations and reduce your risk exposure when appropriately allocated.

In conclusion, securing your financial future in retirement requires careful planning, prudent spending, and intelligent allocations that complement one another. With these strategies, you can better navigate the challenges of volatile markets, inflation, and economic uncertainty, increasing the odds that your savings will stand the test of time.

Originally published in the New Haven Register on 10-7-23