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I’m 75 and retired with $900,000. How do I avoid running out of money?

Two 75-year-old retirees review their finances to ensure their savings can support them for the rest of their lives.

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To ensure that your retirement savings last the rest of your life, you often need to balance income and expenses over your expected lifespan. But let’s say you have $900,000 in an IRA. You can also consider whether you want to leave a financial legacy. And since all long-term forecasts are subject to change, you need to manage risk, possibly with the help of insurance policies and portfolio diversification.

Here’s how a 75-year-old with nearly $1 million in savings might approach income and expense planning for the rest of his life. Whether you’re a do-it-yourself retirement planner or need someone to guide you through every step of the process, a financial advisor can provide you with valuable insight.

Your savings will likely last the rest of your life if the amount of money you spend does not exceed the amount of income your portfolio generates. With that in mind, figuring out how to spread a certain amount of money over an indefinite period of time depends largely on making realistic projections of your expenses and income, while also taking into account circumstances that are difficult to foresee.

One important piece of information that is especially difficult to predict is how long a retiree is likely to live. The Social Security Administration’s life expectancy calculator indicates that a man who is now 75 is expected to live to be 87, while a woman of the same age could live to be almost 89. Of course, your individual life expectancy may vary depending on whether you smoke. , exercising, maintaining a healthy weight, or having an existing medical condition, among other factors.

The task of calculating whether your savings will last is further complicated by the possibility of unexpected events that can range from prolonged market booms or recessions to the need for expensive long-term care. However, if you use conservative projections and build in a buffer, you may be able to create a workable budget that will allow you to live comfortably for the rest of your life without depleting your savings. But if you need help creating a retirement income plan and/or budget, consider contacting a financial advisor.

A financial advisor meets with two clients in their seventies.
A financial advisor meets with two clients in their seventies.

Starting with retirement income, you can use the 4% rule as a shortcut to estimate a safe withdrawal rate. This guideline suggests that withdrawing 4% of your portfolio in your first year of retirement and then adjusting your subsequent withdrawals for inflation each year can ensure your savings last 30 years.

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