The first concern for every retiree is what would happen if they outlive their money. If they happen to live an extra decade or half than they have calculated, what would happen to them when the retirement fund gets drained? Here are a few ways to avoid outliving the retirement fund.
Manage the money
After the retirement, the retirees would live in an independent income system where they no longer would be able to earn money enough to live their retirement life. It is better to put the money in a risk free and inflation resistant investment. Keep a tab on the money, you would withdraw every year. The optimal amount would be 4% of your total retirement nest, per year. However, due to inflation and unexpected costs, it is better to limit to 3%.
Which to use first?
There would a lot of income sources planned for your retirement. You should know which one you should use first. You should use the taxable accounts initially and then, move to tax deferred accounts. This would have the advantage of taxes not building up, as time passes by.
Change your plans annually
The economic conditions might not be same throughout your retirement. Make a budget of how much to spend for entertainment, energy bills and other requirements and be flexible to restrict a few items from the list to keep your retirement fund go on. Depending upon the market status, make some tweaks, every year. Calculate your new balance and adjust the financial planner to decide how much to withdraw.
Find a source of income
You need to add a little to your retirement fund, every year to make sure it would last long. Having dividend paying stocks is one of the most common ways to increase the retirement fund. Renting the big house and living in a small apartment would also give a considerable income, every month. One can find a lot of sources of income based on the resources he possesses.
Leasing the estate, selling off assets and taking up a small part time job are a few other ways to increase the retirement nest. However, these cannot be the options to start at the time, when your retirement fund is almost finished. You need to start these from the day one. You might not be physically fit to perform some of the above said options as you grow old and thus, it is better to increase the nest as much as possible, when you are still able to do so.