Financial basis

Comfort in retirement: how to avoid running out of money

We are all living longer these days and these life expectancy figures are only going to increase. Since people live for three or four decades in retirement, it’s essential that you have enough money to enjoy all of your retirement days. What do you do if you run out of money?

There are many ways people can run out of money, but there are simple ways to avoid it.

Write your retirement plan (and check it often)

The #1 question we get as financial experts is: Will I have enough money for my retirement? No one wants to outlive their money, so our first tip is to make a plan. Having a comprehensive plan before you retire can save you headaches later.

To create a retirement plan, you need to answer a few basic questions:

  • What are your income needs?
  • Do you have additional sources of income?
  • Will you have a gap in your income needs?
  • If so, what resources will you have to fill these gaps?

A financial advisor can help you answer these questions and start putting a plan in place. Having this retirement professional helps you identify your current and future needs.

Invest your money in the right place

An important part of your retirement plan is deciding where to invest your money. This is one of the reasons why, when designing a retirement plan, one of the first things we look at is our clients’ risk tolerance. This is one of the most important things to know before investing. If you take more risk than you think and the market goes down, you may panic and make a costly decision. Remember that an investment that works for one person may not be a good investment for you. Speak to a financial advisor to learn about your options and which approach is best for your needs.

Don’t be a victim of fraud

Phishing emails and fraudulent phone calls are increasingly common. This is especially true for those who are already retired. People are trying to take advantage of our older generations. On average, seniors lose $1 billion a year to scams. All retirees and even those approaching retirement should be informed and trained to avoid scams.

First, research any purchases, donations, or investments before you jump in. If an opportunity seems too good to be true, it probably is. The consequences of being the victim of fraud could be considerable. You may think this will never happen to you, but it could happen. It happens more often than you might think. Scammers are getting smarter and more sophisticated, especially with all of our online information.

If you’ve been scammed or defrauded, you may not know until it’s too late. Always be proactive rather than reactive. Trust your instincts, be worried, and ask lots of questions. Don’t make a quick decision on your own. Always ask your financial planner if this financial decision is wise.

Have a budget and stick to it

When most people reach retirement age, they want to maintain the same standard of living to which they have grown accustomed. Having a budget can help you get there. While many of us may consider this a simple step, it’s surprising how many people don’t have a budget.

Start your budget planning by tracking all your expenses. This will help you see where every dollar is going. Start tracking your income, where it comes from and exactly how much it brings you on a monthly basis. After tracking your income, make sure your expenses are less than your monthly income. If not, find a way to reduce some expenses. This budget will help you determine how much money you need on a monthly and annual basis to support the lifestyle you want and to help you maintain it until retirement.

A budget is a useful tool in your financial planning journey. But also make sure you have an emergency fund on hand. We saw how crucial this was for many people at the height of the pandemic. Try to have at least three to six months of spending in this fund if you lose your job, have car trouble, or have an emergency home repair.

No matter how close or far you are to retirement, you want to make sure you have enough money. Don’t be afraid to ask your financial planner what you need to do. You want to continue living the lifestyle you’ve grown accustomed to well beyond your golden years, and getting there starts with a plan.

Founder and CEO, Drake and Associates

Tony Drake is a CERTIFIED FINANCIAL PLANNER™ and the Founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an investment advisor and has helped clients prepare for retirement for over a decade. He hosts the weekly radio show The Retirement Ready on WTMJ Radio and is regularly featured on Milwaukee TV stations. Tony is passionate about building strong relationships with his clients to help them develop a solid plan for their retirement.