Retirement should be about enjoying the years you’ve worked for, not constantly worrying about whether your savings will last. Rising living costs, longer life expectancy and market swings, however, can make that goal feel harder to reach. So, what can you actually do to protect your finances without overcomplicating things?
Plan ahead
Poor investments are not always the reason a retirement account shrinks. Financial planners say weak income planning, unrealistic spending expectations and withdrawing money at the wrong time often cause greater damage. Before leaving the workforce, certified financial planner Michael Espinosa recommends confirming your savings can support the lifestyle you want. Retirement planning tools or guidance from a financial adviser can estimate yearly expenses while accounting for inflation, healthcare and housing costs.
Market swings deserve attention as well. Melissa Caro, founder of My Retirement Network, recommends keeping about five years of expected income in lower-risk assets such as cash, certificates of deposit and short-term bonds. That approach reduces the chance of selling investments after prices fall and gives the rest of your portfolio time to recover.
Stay flexible
Leaving work does not always mean your expenses will shrink. After all, travel, home repairs and healthcare costs often rise with age, making it worthwhile to review your spending on a regular basis. Keeping discretionary purchases in check during weaker markets and avoiding unnecessary debt can also make your savings last longer.
Another factor worth considering is Social Security. Although the trust fund is projected to be depleted in 2032, current payroll tax revenue would still cover about 78% of scheduled benefits if no changes are made. Instead of worrying about future policy decisions, experts recommend focusing on when you claim benefits, how long you continue working and how much private savings you build alongside them.
