February 2022

Will I have enough money to last me the rest of my life? Does this sound like something you’ve thought about or asked before? I find that the biggest concern for most women (married or single) is whether or not they will outlive their money. Most women, including me, want to know if their retirement nest egg is going to last the rest of their life. 

You’ve heard me mention it time and again, that women outlive men on average by 6 years. Thus, we tend to wonder if this life savings will be there when we need it. It is a true and valid concern, and while I cannot guarantee what will happen in the last years of retirement, we can look at ways to conquer this concern.

If you are still in your accumulation/savings stage, in other words, you haven’t retired yet, work towards saving 15% of income in a 401k or IRA (or some type of tax advantage vehicle) for retirement. If you can save more, great! This will help to build a nest egg for you to use years down the road.

In addition, make sure you have a savings backup at the bank. Not only do you want an emergency fund but you also want an account balance that meets your comfort level. Some people like 3-6 months of expenses saved, others are comfortable with less. Whatever your number is, make sure it is safe and readily available.

In retirement, we also look at having your money into three separate categories, which we like to call “buckets.” The first category, or bucket, is cash. You need to have readily available cash. Some of this is for emergencies and comfort level and some of it is for your regular spending needs in retirement. You might have part of the cash bucket at your bank savings account and part of it in your Raymond James accounts. Bucket #2 is your income bucket. We use various types of investments in this bucket, but the bigger purpose of bucket #2 is to have these investments provide income that we can pour into bucket #1 when needed. Bucket #3 is stocks, which is there for the long term growth of your investments. While the percentage of stocks in your portfolio will vary depending on several factors, some exposure in stocks will help to overcome inflation as well as provide long term growth opportunities for use years into retirement.

While in retirement, it is important that you are able to enjoy your life while ensuring your money lasts. It is important to realize that your biggest variable during these years, is your spending. Sure, there are a lot of other costs while living in retirement: health care expenses, inflation, market fluctuations, interest rate changes, but you don’t have any control over the cost of these items. Knowing your spending is key. 

If you are planning for retirement, get a good idea of what you spend now, so you will have a good starting point for what is needed in retirement. If you are already living in retirement, a general rule of thumb is to stick to withdrawals that equal about 4% of your portfolio. The thought is that this allows for growth on your principal, while living primarily on the income and some profits. By not dipping into the principal (or very little) your money will last for years to come.

Planning for and living in retirement is what we help people do every day at Kindred Financial Partners. Do you know where things stand for you? We have tools that help answer these questions for you. Let’s take a look, so you can see the numbers and sleep well. You shouldn’t have to worry about unanswered questions.

*Investing involves risk and you may incur a profit or loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.