Ensuring you don’t outlive your assets is a key concern for pre-retirees and retirees.
Here are eight tips to help make your money last in retirement.
1. Add to your retirement savings
How much you save each year has a big impact on your retirement readiness.
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If you’re still working, consider increasing contributions to help progress toward your goal. Even small amounts can add up over time.
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You could also consider making your annual increases automatic if that option is available to you.
For 2025, you can contribute up to:
| Header Cell – Column 0 |
401(k) salary deferral limit |
IRA contribution limit |
|---|---|---|
|
If you’re 49 or younger |
$23,500 |
$7,000 |
|
If you’re 50 or older |
$31,000 |
$8,000 |
|
If you’re 60 to 63 |
$34,750 |
N/A |
You generally have until December 31 to contribute to your workplace retirement plan and until April 15 to contribute to an IRA. Be sure to consider processing times when making contributions near the deadline.
2. Review your health care plans
Health care is likely to be one of your largest retirement expenses. Since Medicare doesn’t cover everything, having a plan to help meet costs is critical. To prepare:
- Explore your ability to contribute to a health savings account (HSA) which offers triple tax benefits when used for qualified health care expenses
- Have a plan for any pre-Medicare health insurance needs before age 65
- Ensure you’re building traditional health care costs into your spending estimates
- Develop a strategy to help meet long-term care expenses (ideally between ages 50 and 60)
If you are already enrolled in Medicare, you can take other steps to help keep your retirement on track.
- If subject to Medicare surcharges (IRMAA), explore strategies to reduce IRMAA
- Use the Medicare open enrollment period (October 15 through December 7) to help ensure you’re getting the coverage you need at the best available price
- Review your long-term care plan at least every five years and after significant life changes
3. Plan for a long life
Thanks in part to improved medical care, people are living much longer than they did in the past. Planning for a long life can help you avoid outliving your assets.
As a starting point, you can assume you live to 91 for men and 93 for women, adjusting as needed for known medical conditions, risk factors and family history.
Depending on when you retire, that could mean your money has to last 25 or 30 years.
4. Start smart with your withdrawals
You don’t want to withdraw too much too fast in retirement. The early years are especially critical, because that’s when market declines have their greatest effect.
As a general rule, someone retiring in their mid-60s can take about 4% from their portfolio their first year and increase the amount by 3% annually, assuming they live for 25 years.
While a good starting point, using a financial calculator or working with a financial adviser to assess what makes sense for your specific situation is better.
You should also review your withdrawal strategy at least annually in retirement and after major market events.
Making small adjustments, such as forgoing a spending increase after a down market, can help extend the life of your portfolio.
5. Ensure your investment portfolio supports your goals
When you’re younger, you should generally take more risks to help meet your goals. As you shift to retirement, a more balanced allocation between stocks and fixed income is important to balance inflation and market risks.
You’ll also want to position your portfolio to help meet your retirement spending needs.
We generally recommend retirees maintain 12 months of portfolio withdrawals in cash (in a separate spending account) and another three to five years of portfolio withdrawals in a short-term fixed-income ladder.
Maintaining appropriate cash reserves can help ensure your spending needs are met while allowing your stocks time to recover after a market decline.
Remember that owning too much cash and short-term fixed income also comes with risk, which is that your portfolio doesn’t keep up with inflation.
6. Consider a lifetime annuity
An annuity can provide a guaranteed income stream for life, regardless of how the market performs or how long you live. It’s effectively income insurance, and it can help reduce your reliance on your portfolio for income.
As with any investment, annuities have trade-offs. For example, they’re subject to liquidity constraints, their income payments generally don’t increase with inflation, and there’s a cost for the protection it provides.
7. Don’t forget RMDs
Once you turn 73, you’re generally required to take withdrawals from traditional retirement accounts called required minimum distributions (RMDs). If you don’t, you face a significant penalty — up to 25% of the amount not taken.
The deadline to take your first RMD is typically April 1 the year after you turn 73 and December 31 each year after.
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If you don’t need your RMD for spending and you’re charitably inclined, you can make a qualified charitable distribution (QCD) by transferring assets directly from your IRA to a qualified charity.
A QCD can satisfy all or part of your RMD, and you can exclude up to $108,000 of QCDs from your taxable income in 2025 (per taxpayer).
You could also use your RMD to help fund your grandchild’s education or to purchase life insurance for a legacy.
8. Prepare for curveballs and remain flexible
Risks are unavoidable, but you can prepare for them. One way is to incorporate expectations for market volatility, inflation and longevity into your strategy.
Setting aside three to six months of total expenses in an emergency fund is another smart move, and for some risks, it might make sense to insure against them.
Having appropriate legal documents in place can also help protect you and your family in the event of incapacitation or loss of life.
As much as you prepare, a lot can change along the way. Remaining flexible and being willing to adjust is key.
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Content is provided as educational only and should not be interpreted as specific investment recommendations or advice. Investors should make investment decisions based on their unique investment objectives and financial situation.