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Make Your Retirement Savings Last! 3 Steps

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Make Your Retirement Savings Last! 3 Steps
You’ve worked hard and saved for the future — now you need to make sure your savings last the rest of your life. By understanding the risks you face, you can make smart choices about how much to withdraw and how to handle unexpected financial challenges.

The financial implications of a long life

According to the National Center for Health Statistics, people today can expect to live more than 30 years longer than they did a century ago. Individuals who reached age 65 in 1950 could expect to live an average of 14 years more, to age 79; now a 65-year-old might expect to live for roughly an additional 19 years.1    

AFL’s JoAnne Reilly

A long life can be a wonderful thing. But it does add a challenge to retirement planning prompting you to ask yourself: how long will my savings last?

Here are some strategies to consider that may help your savings last longer for you.

Ways to make retirement savings last

1. Determine a sustainable retirement withdrawal rate

A smart, conservative withdrawal plan can help. Working with a financial advisor to decide how much to withdraw, which accounts to take the money from, and when to do so can help secure a comfortable retirement for you and your spouse or partner, and help ensure your retirement income lasts as long as possible.

How much can you afford to withdraw from your savings each year will depend on your individual needs. Many retirees have an unrealistic idea of the amounts they can withdraw annually without running out of money. Aggressive withdrawals are generally unsustainable — especially when the markets are down.

2. Plan for health care expenses

The cost of health care in America is rising astronomically. Combined with longer lives and less insurance coverage, this presents a potentially huge expense for retirees. What can you do?

A good approach is to factor health care costs into your retirement expenses. The average couple age 65 with median prescription drug expenses needs to save $259,000 to have a 90% chance of having enough for health care expenses in retirement, according to the Employee Benefit Research Institute.2

By accounting for these expenses in your retirement plan, understanding your options for Medicare or other health care solutions, and/or securing long-term care insurance, you may be able to avoid tapping your other savings.

3. Prepare for the unexpected

While no one can predict the future, you can prepare by taking a few simple steps. For example, always keep enough cash to last six months easily accessible. With this cash reserve available, you may not have to deplete your main savings in the event of an emergency, or be required to liquidate longer-term investments.

Your Ameriprise financial advisor can help you develop a plan for making your savings last as long as possible, protecting your assets from health care expenses and preparing you for unexpected events with easily accessible savings accounts.

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Editor’s Notes:  We thank Joanne S. Reilly, CFP®, APMA®, CDFATM  Financial Advisor, Joanne Reilly and Associates – a financial advisory practice of Ameriprise Financial Services, Inc. and an Ameriprise Platinum Financial Services® practice.  Visit Reilly on her website at Joanne Reilly and Associates, on Facebook and on Linkedin.

Financial adviser Joanne Reilly, CFP ® , CDFA™, APMA ® (Joanne Reilly and Associates) is a Certified Financial Planner with more than 30+ years of successful experience helping her clients to build exciting futures as well as weather unexpected circumstances. In addition to holding the CFP designation, she also holds the CDFA (Certified Divorce Financial Analyst designation) as well as the APMA (Accredited Portfolio Management Advisor) designation.

Joanne, affiliated with Ameriprise and based in Boston, MA, is licensed to practice in multiple states throughout the country (N, S, E, W, as well as the mid-section). A graduate of Smith College, her previous positions included Bank of America (Senior Vice President, Investments and Insurance).

As an After-Fiftier, she loves Boston – but also enjoys travel, time with friends and family, tennis, music and the fine arts. She also makes time for an important priority in her life: The Haven Project. The Haven Project is a growing non-profit organization assisting the needs of homeless young adults on the north shore of Boston. Their mission? EQUIP and EMPOWER the growing population of unaccompanied and at-risk young adults ages 17-24 in the geographical area with the skills and support they need to achieve their life’s purpose.

Visit Joanne on her website at Joanne Reilly and Associates, on Facebook and on Linkedin.

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