How To Make Your Money Last After Retirement
The average lifespan in the US is around 78 years old*, which means that you will need to support yourself on your post-retirement income for close to two decades. The challenge for retired federal employees, then, is how to stretch their money. Our ACESS LOANS™ products have some tips for you.
Post-Retirement Money Management Tips
Plan How Much You Will Withdraw
It’s tempting to splurge post-retirement when you see a large sum in your bank account. However, retirees must remember that they must stretch that amount for the rest of their life. To make this possible, determine how much you can withdraw every year from your savings and make a budget based on that. Financial experts suggest withdrawing only up to 4% of your savings in the first year of retirement. You can increase your withdrawals if inflation rates are low, but skip adjustments if inflation rates are high.
Find Additional Funds For Big Expenses
Unexpected expenses are inevitable. If you suddenly find yourself in need of a large sum of money, find other sources rather than withdrawing from your savings immediately. A personal loan with our ACCESS LOANS™ loan program is an affordable option for covering an unexpected expense without having to withdraw from your savings.
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Reduce Your Expenses
The most obvious way to make sure you don’t go through your savings is to keep your expenses at a minimum. If possible, reduce the cost of your basic needs—food, housing, utilities, transportation, and so on. Keep your leisure expenses at a minimum, too. You don’t need to deprive yourself of everything good in the world, but keep yourself disciplined.
Keep Earning
It’s important to maintain cash inflow even after retirement. You may have stopped working full-time, but you can still work part-time, as a consultant, or start a business. Investments are also a good way to keep earning. Even if you don’t earn as much as you used to, having some cash coming in would help minimize withdrawals from your savings.
Be Smart About Your Taxes
You may unwittingly pay higher taxes if you are not strategic about your savings and investments pre-and post-retirement. Making tax-exempt investments is a smart move for those in the high-income tax bracket. Likewise, withdrawing first from your Roth plan will keep you from increasing your income level during retirement. It’s best to get good tax advice and plan ahead of time to avoid paying unnecessarily high taxes during retirement.
Making your money last throughout old age is not as complicated as you may think it is. However, you do need to be smart and plan ahead. If you need a fallback, consider ACCESS LOANS™ loan products. Contact us today, we are here to help!
* ACCESS LOANS™ products are funded and serviced by Safra National Bank of New York (“SNBNY”).
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