Retirement isn’t just about leaving the workforce—it’s about ensuring your savings last as long as you do. According to the Congressional Budget Office (CBO), the average 65-year-old in the U.S. today can expect to live another 20 years, reaching age 85. With longer lifespans comes a greater need for financial security, making it more important than ever to have a strategy that sustains you through every stage of retirement.
Whether you’ve spent decades growing your wealth or are just starting to map out your retirement strategy, the key is making your money work for you. Let’s explore the smartest ways to stretch your savings, secure your income, and enjoy the retirement you’ve earned—without financial worry.
For many Americans approaching retirement, the goal is to maintain the lifestyle they’ve grown accustomed to, but for those with significant wealth, there are added layers to consider. Your retirement income needs may be more complex than others due to multiple streams of income, investment accounts, properties, and other assets. Without careful planning, you may face the risk of running out of money in your later years.
According to the 2024 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), 74% of retirees report feeling confident about having enough money to live comfortably throughout their retirement years. However, the same survey indicates that many retirees are facing financial challenges, with over two-thirds reporting struggles with credit card debt, a significant increase from 40% in 2022.
Additionally, nearly one-third of retirees are spending more than they can afford, up from 17% in 2022. For those with substantial wealth, these figures underscore the importance of a robust strategy that aligns with both their lifestyle and financial goals.
One of the most important aspects of helping ensure your wealth lasts is establishing a sustainable withdrawal strategy. This strategy dictates how much you can safely withdraw from your retirement accounts each year without depleting your savings.
A popular rule of thumb is the 4% rule, which suggests that withdrawing 4% of your portfolio per year can provide you with income for at least 30 years. However, this rule may not be as reliable for individuals with a more complex financial situation, such as those with significant wealth or high-income needs.
A more personalized approach may involve adjusting your withdrawal rate based on factors like:
For wealthy retirees, the importance of income diversification cannot be overstated. With the right planning, you can create multiple streams of income to help support your retirement goals.
Here are some ways to diversify your income:
Taxes can be a significant drain on your wealth, and many retirees overlook the impact that taxes will have on their income. Planning for taxes is essential to help preserve your wealth in retirement.
As you age, the likelihood of needing long-term care increases. Healthcare and long-term care expenses can quickly deplete your retirement savings if you don’t plan ahead. In Arkansas, long-term care costs are generally lower than the national average, with assisted living averaging around $4,146 per month and nursing home care ranging from $110,360 for a semi-private room to $123,913 for a private room annually. For “skilled nursing care” (Skilled nursing care goes beyond basic assistance with daily living and focuses on medical and rehabilitative needs that require the expertise of trained professionals) the median cost for a semi private room in Arkansas is $7,422, and $8,390 for a private room. Here are some options for covering these costs:
Estate planning isn’t just about passing on your wealth; it’s about helping ensure your assets are protected and your wishes are honored. A well-thought-out estate plan is essential for helping ensure your money lasts for generations.
Some key components of estate planning include:
Retirement isn’t a one-time event—it’s a phase of life that requires continuous planning. As markets fluctuate, tax laws change, and life circumstances evolve, it’s essential to review your financial plan on a regular basis to help ensure that you remain on track.
Regular reviews with a financial advisor can help you make adjustments to your strategy, update your estate plan, and help ensure that your income streams are aligned with your goals.
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Making your money last in retirement requires careful planning, diversification, tax efficiency, and estate planning. For high-net-worth individuals approaching retirement, this task is often more complex due to the variety of assets and income sources they have accumulated. At NJM Wealth Preservation Strategies, we’re experienced in helping wealthy retirees navigate these complexities and build a retirement strategy that helps ensure their wealth lasts and supports their desired lifestyle.
Your ideal withdrawal rate depends on several factors, including your life expectancy, investment returns, income needs, and any unforeseen costs, such as healthcare. It’s best to work with a financial advisor who can analyze your specific situation and recommend a sustainable withdrawal rate tailored to your unique financial goals.
While diversification is key to a healthy investment strategy, the decision to include international stocks in your portfolio depends on your risk tolerance and retirement goals. International investments can provide growth opportunities, but they also come with risks, such as currency fluctuations and geopolitical factors. Balancing your portfolio with both domestic and international investments can provide exposure to different markets and asset classes.
Inflation erodes purchasing power over time, so it’s important to plan for increasing costs in the future. One strategy is to invest in assets that traditionally outpace inflation, such as stocks or real estate. Additionally, consider inflation-adjusted withdrawal strategies or products like inflation-protected securities to help ensure your income keeps pace with rising costs.
It depends on the type of account. If you are over 50, you can continue contributing to retirement accounts such as IRAs or 401(k)s if you are still working. However, once you retire, you can no longer contribute to these accounts unless you have earned income (from part-time work, for example). Consider exploring options like Roth IRAs for tax-free growth and future withdrawals if you qualify.
It’s a valid concern, but planning ahead can help reduce the risk. If you outlive your retirement savings, consider income sources like annuities, which can provide guaranteed lifetime income. Additionally, revisiting your withdrawal strategy, downsizing your home, or working part-time during retirement are other options to help ensure your funds last longer. Planning for longevity and reviewing your retirement strategy regularly can help mitigate this risk.
NJM Wealth Preservation Strategies does not provide specific investment advice or endorsements. This article is for educational purposes only and should not be interpreted as personalized financial advice. All investments carry risks, including the potential loss of principal. Please consult with a licensed professional to determine the best course of action for your unique financial situation.