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How to make your retirement nest egg last longer

by , 24 September 2014

Everyone wants to retire comfortably, but many people get stuck somewhere along the way.

Saving enough for retirement takes time, discipline, and sacrifice.

Once you've managed to save enough to live comfortably during retirement, another problem emerges: being able to stretch out your retirement savings so you don't run out of money.

Many retirees are faced with a dilemma: how much of their retirement nest egg should they spend each year so they don’t run out of money later?
 
Considering that life expectancy has increased and that we are now expected to live well into our 90s, that means that we should be able to cover around 30 years of expenses with our retirement savings.
 
How do you stretch out your retirement savings to make your money last as long as you do? Here are four ways to make your retirement nest egg last longer.
 
1. Stick to the four percent rule
 
Financial experts recommend spending four percent of your assets each year and rebalancing the retirement portfolio each year in order to maintain a 60 to 40 stock to bond ratio.
 
2. Delay retirement or get a part-time job
 
If you don’t want to be caught unprepared and you enjoy an active lifestyle, you can continue working well into your 60s. You can delay retirement or get a part-time job after you retire. There are many part-time business opportunities for retirees nowadays – you can work from home, all you need is a computer and a fast internet connection.
 
3. Diversify your portfolio to manage market volatility
 
Spreading out your investments to reduce risks is a commonly used strategy to make your retirement nest egg last longer. Most financial advisors recommend that you spread your wealth across various types of investments. In addition to the usual stocks and bonds, you can add real-estate investment trusts to the mix. A financial advisor can help create the suitable investment portfolio according to your needs and risk tolerance.
 
4. The systematic withdrawal plan
 
 The systematic withdrawal plan allows you to invest in stocks, bonds, and mutual funds, with money being withdrawn on a regular basis proportionately from all funds or from specific funds. If the investments are performing well, the income increases and you can grow the portfolio. By using this system, the retiree could maintain a comfortable lifestyle for the entire retirement period.

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How to make your retirement nest egg last longer
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