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7 Steps to Make $1 Million Last 30 Years or More in Retirement
Those who reach age 65 have a one in five chance of living into their 90s.
This means you need to plan for a longer retirement. Even if you save $1 million for your retirement, you have to make sure to budget appropriately. Seeking out professional advice from a financial advisor is a great place to start.
Here are some additional steps to make sure you don't outlive your retirement savings.
7 Steps to Make Your Retirement Savings Last 30 Years
1. Keep Investing Intelligently
Studies show consulting a financial advisor can help you earn up to an extra 4% return on your investments. Advisors are also skilled in identifying areas where you could be overpaying in taxes and fees, as well as how to best allocate your savings among your retirement accounts and investments.
2. Maximize the Return on Your Liquid Assets
If you have liquid savings sitting in a normal savings account, you’re leaving money on the table. For example, if you have $250,000 in a high-interest account earning 2.45% and save over 20 years, you’d earn $140,127 in interest alone.
You can find high-interest checking and savings accounts offering as much as 2.45% interest, depending on your deposits and balance.
3. Plan for Healthcare Expenses
Studies show the average 65-year-old couple will need $220,000 to cover health care expenses in retirement, which are known to jump 40%. But most people dramatically underestimate their healthcare expenses and overestimate the help they will get from Medicare. Top economist Paul Fronstin estimates that Medicare will only cover 51% of healthcare expenses for retirees. A financial advisor can help you understand the costs you could face and what medical coverage is best for your situation.
4. Pay Off Outstanding High-Interest Debt
In 2016, 68% of households headed by someone 55 or over carried some form of debt, according to the latest report from the Employee Benefit Research Institute. Of those households, the average debt amount stood at nearly $77,000.
If you’re still carrying debt, increase your payments in the last few years leading up to retirement. Consider making multiple payments per month.
5. Don't Overpay On Your Taxes
The most common mistakes in retirement are overpaying taxes on Social Security benefits, paying investment surtaxes, overpaying capital gains taxes, paying higher medicare premiums and paying penalties on 401(k) or other retirement account distributions.
When it comes to taxes, we strongly recommend speaking to a financial advisor for advice specific to your situation.
6. Have the Right Life Insurance Products
Should something happen to you, a life insurance policy provides financial protection to your dependents. You should also consider life insurance regardless of your salary, your work situation or your good health.
The primary consideration with life insurance is how large a policy you need. Your ideal policy size depends on how much you make, your assets, age and the financial situation of your dependents.
7. The Best Way to Make Your Retirement Savings Last
The truth is many of these challenges are complex. A financial advisor can help you realize your goals and make sure your money will last, as well as identify savings and investment strategies you may not discover in your own research.
Chances are, there are several highly qualified financial advisors in your town. However, it can be daunting to choose one.
This new, award-winning tool makes it easy to find the right financial advisor for you. Now you can get matched with up to three local fiduciary advisors that have passed a rigorous screening process.
1. Simply enter your ZIP code below.
2. After you enter your ZIP code and answer a few questions about your financial goals, you can compare up to three top advisors local to you and decide who to work with.
3. Enjoy a better financial future!
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SmartAsset - copyright 2018
SmartAsset - copyright 2018