How to Make Retirement Savings Last Your Lifetime

Look at your monthly budget by running your income and expenses through an online retirement calculator such as those offered by Bankrate and T. Rowe Price. This will give you estimates showing how long your money is likely to last.

No one can predict when the next bear market will hit, but it’s wise not to take unnecessary risks with your portfolio. That may mean holding a larger portion in bonds, Bernstein says. They’re generally more stable than stocks because they pay a specific yield and you get your principal back at maturity.

That said, you still need to hold a stake in stocks because they offer more potential long-term growth, which can help you keep up with inflation. Some stocks also pay a dividend, giving you additional income.

For greater safety, consider (if you can) setting aside a cash account of one to five years of living expenses. With that buffer, you won’t be forced to tap your portfolio at market lows. Keep that money in a safe, easily accessible place, such as a bank savings account.

One common rule calls for taking out about 4 percent of your portfolio in the first year of retirement (which may seem pretty low) but then adjusting that amount for inflation (which came in at 3.9 percent in 2023) in following years. So if you have $1 million in savings, you could withdraw $40,000 in the first year, then increase that amount by, say, 3 percent to $41,200 the following year. Historical data shows that with this approach, you’re unlikely to run out of money over 30 years.

But many people want to take a more flexible approach to their annual income. If so, "assess your portfolio and income amounts annually, then decide on your spending rate," says Jonathan Clements, editor of "My Money Journey" (Harriman House, 2023) and founder of HumbleDollar. In years when you suffer losses, you’ll need to decrease your spending the following year, and in years following bull markets, you may be able to splurge a bit. "Be sure you have a realistic picture, and be ready to cut back when it’s necessary," he says.

How to plan for both expected and unexpected big-ticket expenditures? As part of the cash buffer you set aside, budget enough to pay for one or two major expenditures a year, Clements says.

To boost your cash savings, you could take on part-time work. (Depending on your other income, this could have tax implications.) A recent T. Rowe Price study found that about 20 percent of Americans work either full- or part-time after reaching retirement age. Roughly half do so for financial reasons, while 45 percent choose to work for the social and emotional benefits.

Keeping a stake in stocks remains your best shot at staying ahead of inflation over the long term, says Allan Roth, a certified financial planner in Colorado Springs, Colo. Granted, you may experience sharp downturns along the way. Still, over the past 30 years, stocks as measured by the S&P 500 average have returned an annualized 10.2 percent, while inflation has averaged 2.5 percent.

To keep up with inflation with less risk of volatility, Roth also recommends Treasury Inflation-Protected Securities (TIPS), which are federally guaranteed bonds with returns that track the consumer price index, a measure of inflation. Though the principal value fluctuates, at maturity you’ll receive an increased inflation-adjusted price or the original principal value, whichever is greater. (You’ll never get less.) You can buy individual TIPS bonds at treasurydirect.gov or through a brokerage firm. You can also invest through a TIPS fund such as Vanguard Inflation-Protected Securities (VIPSX).

Another way to stay ahead is to make the kind of big-picture changes you’ve likely been thinking about but have been putting off, like downsizing or moving to a place with lower taxes. Or maybe you can become a one-car family to save money on insurance and upkeep.

Yes, but only if you’re under the full retirement age (67 for those born in 1960 or later). In that case, your benefit may be reduced by $1 for every $2 you earn above the annual limit, which is $22,300 for 2024. But your earnings will no longer be reduced once you reach full retirement age, says Michael Piper, a certified public accountant and founder of Open Social Security, a free online Social Security calculator.

But no matter how old you are, your Social Security benefits are taxable, with the amount of tax based on your income whether it’s earned from paid work or investments. If your income is above $25,000 (for single filers) or $32,000 (for married joint filers), as much as 85 percent of your benefit is taxable. And nine states—Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont, and West Virginia—also separately tax Social Security benefits, according to AARP data. (Social Security’s definition of income includes your adjusted gross income and half of your benefit plus tax-exempt interest.)

You can change plans during Medicare’s next open enrollment period, which runs from Oct. 15 through Dec. 7. Even if you don’t intend to switch, it’s important to review your coverage annually because there may be cost and benefit changes.

Say you have original Medicare (Part A for hospitals and Part B for doctors) but also buy a Medigap plan (supplemental coverage that helps pay the 20 percent of costs not covered by original Medicare) and a prescription drug plan (Part D). You can change into new Medigap or Part D plans that better suit your need for coverage or your ability to afford them.

If you have new prescriptions or your insurer changed the cost and level of coverage, you could save money by switching Part D plans. As for Medigap, most states offer at least 10 plan options.

But while original Medicare plus Medigap plans may offer the most robust coverage in the event you have a chronic health problem, the cost can be high. Medigap plans can run about $200 a month. So consider an all-in-one Medicare Advantage plan. After all, the premiums for Medicare Advantage can be low or even zero, and the plans cap out-of-pocket costs. But make sure you understand the limits of these plans, which typically restrict you to a network of providers and hospitals. By contrast, original Medicare gives you access to any provider that takes Medicare.

If you’re already in a Medicare Advantage plan and you aren’t happy with it, you can switch to another Advantage plan. (There’s also a separate Medicare Advantage enrollment period, which runs from Jan. 1 through March 31.) Again, be sure to check the available providers and coverage rules because they vary.

What if you’re in a Medicare Advantage plan and want to switch to original Medicare? Although it’s allowed during the annual open enrollment period, it might not be affordable if you also want to buy a Medigap plan. That’s because your guaranteed right to purchase a Medigap plan is available only at initial enrollment. In most states, if you try to buy a Medigap plan later, you may be denied or could be subject to underwriting, which could raise premium prices.

For more details, go to the plan finder tools at medicare.gov. There’s also a 24-hour helpline at 800-633-4227. And you can get free Medicare counseling through your State Health Insurance Assistance Program.

Have a large, unexpected bill, perhaps for home repairs or a medical procedure? You really don’t want to take on debt in retirement, so loans usually aren’t a good solution. Here are three alternatives.

Look to Your Porfolio
Your best option may be to make withdrawals from your portfolio, first from your Roth IRA, if you have one, because you generally don’t have to pay taxes on those funds. Second best is to take money from stocks and/or bonds, although doing this will have tax consequences. The amount you’ll pay depends on how long you’ve held the assets, the amount you paid for them, and your taxable income. Finally, assets that you pull from a 401(k) or traditional IRA are taxed as ordinary income. So before you do, it’s best to consult a tax pro, who may suggest strategies for reducing the tax bite.

Sell Some Stuff You Don’t Care About
You probably own things that can be sold for cash. To gauge how much your items could bring in, compare prices for similar products at websites like AptDeco, eBay, and the RealReal. Then sell them yourself at one of those places or another outlet. For more valuable items, hire an appraiser first. To find one, search on the websites of the Appraisers Association of America, the American Society of Appraisers, or the International Society of Appraisers. An appraiser should charge a flat or hourly fee, not a percentage of the item’s value. The cost could run $200 an hour or more for someone with experience.

Lower Some Expenses
A major cost may be high home and car insurance premiums. Perhaps you can lower them by switching insurers or raising your deductible, says Carolyn McClanahan, a certified financial planner in Jacksonville, Fla. Or maybe you can cash in a no-longer-needed life insurance policy. But check with a financial adviser first to find out the tax ramifications and determine your coverage needs.