Five Ways to Make Your Nest Egg Last a Lifetime

Here's a list of five ways to make your nest egg last a lifetime from MarketWatch:

1. Delay claiming Social Security. One way to create the best inflation-adjusted source of income at the moment is to delay taking Social Security for as long as possible.

2. Consider purchasing an annuity. It's not right for everyone, said McCubbin. But for those who are retiring with a large nest egg and who don't have enough fixed and guaranteed sources of income to match their fixed expenses, an annuity might fit the bill.

3. Pay down your mortgage. Many would-be retirees should enter retirement debt-free, owning their home free and clear, according to McCubbin.

4. Allocate your assets wisely. Many retirees place large portions of their nest eggs in investments that provide a guaranteed return on capital. AARP's view is that retirees should build portfolios that are broadly diversified and based on one's tolerance for risk.

5. Withdraw funds carefully. Conventional wisdom suggests that you should withdraw no more than 4% of your savings during retirement. "In tough economic times, you may want to withdraw a smaller percentage of your savings, if possible," AARP said. "When the returns on your investments improve, you can increase your withdrawals."

Here's my take on how to make your nest egg last a lifetime:

1. Make a good income.

2. Keep your spending under control.

3. Become debt free. This includes your mortgage.

4. Sock away a boatload of money using various retirement savings options.

5. Don't count on Social Security for a penny. If you get anything, consider it a windfall.

6. Allocate your assets wisely. I think we've all learned (many the hard way) that the sooner you'll need the money, the more you need to put it in something safe.

7. Spend only what's necessary, especially in the early years of retirement. Of course you'll want to have some fun (and you should plan/budget for it), but you don't want to blow 10% of your nest egg in year 1 either.

At least this is my plan. So far, it's working out -- even with the slump in the economy and the investment losses over the past year.

Someone reading this is bound to be thinking "yeah, but that method eliminates having fun when you're younger -- all you'll be doing is saving and not enjoying life" (or something like this -- believe me, I get enough comments of this kind.) To that, I say: "No, you're wrong." If you do #1 well enough, you'll have plenty of room for fun in addition to covering your basic needs as well as savings goals. So, how do you do #1 well? You manage your career and/or work to make extra money where you can.

Comments

[Terry]

This article assumes you own your home. I guess you can tell who it was (not) written for!