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How to Not Outlive Your Retirement Savings

In today's world where people are living longer and future financial conditions are uncertain, a majority of them worry about running out of money in retirement. About 58% of those saving for retirement or already retired feel this fear.1

That's especially true for Gen X and Baby Boomers who are approaching retirement age or are already retired. To help ease these worries, an effective strategy is needed to protect retirement wealth and ensure a comfortable and secure financial future.

The best time to start planning is before retirement or early on in retirement. This allows for a retirement savings plan that works in regard to assets, needs and goals. Then, throughout retirement, all can be monitored and adjusted for a financial management approach that ensures an adequate amount of money remains in retirement accounts.

Utilizing the approaches below — with help from financial advisors — retirement years can be enjoyed.


Plan Your Investment Mix Strategy

Managing retirement funds means having a smart plan for how to allocate assets based on factors like age, retirement goals and comfort with risk. Understanding how markets work is important for building this plan, especially during volatile (unstable) markets.

As retirement nears, knowing your risk tolerance level becomes key. This self-assessment guides adjusting a portfolio, potentially shifting toward more conservative investments with a long-term "strategic" or "static" asset distribution approach.

A static asset distribution approach2 means keeping the percentage of stocks, bonds and cash the same long-term as an investment management strategy. Keeping a portfolio mix fixed during fluctuations in markets and the economy is part of this passive investing method.3 However, it may limit chances to profit from growing investments that outpace inflation.

It's important to consider needing flexibility in your asset allocation plan during retirement. Strictly sticking to a passive approach might not adapt well to changing financial or market situations. That means inflation could slowly decrease the purchasing power during retirement4 with the static method.

An alternative is a "dynamic" portfolio management approach.6 With this method, you actively respond to market changes3 by frequently shifting investments to different types when the market changes.4 With this strategy, you can create and maintain a diversified portfolio that can help reduce risks5 while allowing for growth.

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Secure your financial future and ease fears of outliving your retirement savings. Get asset distribution, tax efficiency and estate planning tips.

However, being open to reallocating assets and regularly checking the investment portions in your retirement portfolio is key. Changes should align with current trends and retirement goals.

Flexibility is essential to comfortably do dynamic portfolio management. It means actively responding to market fluctuations rather than just reacting. Dynamically adjusting a portfolio allows value to be added to it through well-timed reactions to market shifts.4 Just be sure not to take big risks with savings that otherwise may be needed.


Create a Plan for Retirement Savings Withdrawals

A well-planned withdrawal process is one of the best approaches to preserving and maximizing income during retirement. Here are some tips for creating one.

  • Set a budget for withdrawals. Experts suggest taking just 4% each year6 from your retirement savings accounts. How much money taken out each year can really affect how long retirement funds last. There are several ways to withdraw money from retirement accounts, but each option needs careful thought. It's important to pick an appropriate withdrawal method for yourself because each has different tax and money consequences.
  • Consider the tax implications of your strategy. One key part of a withdrawal plan is understanding how to take money in a tax-smart way.7 Doing this can greatly enhance income in retirement and help money go further over time.
  • If you're 59 1⁄2 or older, consider withdrawing from 401(k)s now while tax rates are low, around 12-22% depending on your income. That's because the laws may change in 2026, increasing tax rates. So, you may want to benefit from the lower tax rates in effect through 2025. This is different from the usual suggestion to delay taking money as long as possible.7 But, it considers those possible 2026 changes. Talk to your tax advisor about how future tax law changes could impact what you pay overall and your lifetime taxes as you make your withdrawal plan.
  • Plan your retirement date carefully. Another important factor for preserving your retirement funds is when you leave work permanently.8 Many dream of early retirement, but it may be one of the biggest financial mistakes. Quitting work early both shortens the time for investments to grow and lengthens the period savings must last. You may also be tempted to start getting Social Security too soon, before age 70 when the monthly payments peak. These decisions deeply affect how long your money will last.8
  • Don't forget RMDs. In addition to choosing your ideal retirement start date, properly following required minimum distribution (RMD)9 rules is key. Mistakes managing RMDs can lead to unnecessary taxes. For example, not taking the required amounts on time can result in heavy penalties, sometimes exceeding 50% of what was supposed to be taken out.9 Careful planning and knowing the RMD guidelines helps prevent costly mistakes and lets you withdraw savings tax efficiently.9

Different retirement account withdrawal strategies, like proportionally removing money10 from taxable, tax-deferred and tax-free accounts also aid reducing taxes owed. Understanding tax implications from various accounts could notably cut your lifetime taxes. Consider spreading larger withdrawals over multiple years to better manage tax brackets as well.10

Speak with your financial or tax advisor about the most suitable withdrawal techniques suited to meeting your retirement objectives.


Use Estate Planning and Charitable Donations Effectively

Estate planning and donating to charities are helpful strategies for preserving wealth and creating a legacy.11 Well-planned estates make sure remaining assets from retirement and investment funds transfer effectively. If done right, this strategy aligns with personal values, offers tax benefits and fulfills charitable goals. Leaving donations through estates could transmit your personal values beyond your lifetime and could impact future generations.

When passing along assets, talk with financial and legal experts about estate planning tools like trusts and charitable gifts. Discuss tax implications and long-term impacts on beneficiaries. Donating to charities as part of estate planning, including individual gifts and bequests after death, strongly aids U.S. nonprofits. This demonstrates the power of planned future giving. These strategies not only can respect your personal beliefs but also may provide practical benefits like reducing estate taxes and encouraging multi-generation donations.


Take An Active Role in Securing Your Retirement Savings

Protecting your retirement savings requires constant effort over time. A proactive retirement planning approach means routinely checking and modifying plans as your needs and market situations change. It also can lessen worries about your retirement funds running out while you're alive.

Important disclosure information

Asset allocation and diversifications do not ensure against loss. This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Lorie Konish, “Retirees' biggest fear is outliving their assets, research finds. These tips can help," CNBC, June 13, 2023, accessed January 19, 2024. Back
  2. Thomas Catalano, “6 Asset Allocation Strategies That Work," Investopedia, published December 4, 2021, accessed January 18, 2024. Back
  3. Charles Potters, “Active vs. Passive Investing: What's the Difference?," Investopedia, published September 6, accessed February 27, 2024. Back
  4. Veronica Dagher and Anne Tergesen, “Here's What a $2 Million Retirement Looks Like in America," The Wall Street Journal, published August 29, 2022, accessed December 28, 2023. Back
  5. James Chen, “Dynamic Asset Allocation: What it is, How it Works," Investopedia, published July 12, 2022, accessed February 23, 2024. Back
  6. Brian O'Connell, “How Much Should You Spend in Retirement? Use the 4% Rule," U.S. News, published November 8, 2023, accessed February 27, 2024. Back
  7. Kate Dore, CFP, “Here's how to leverage the 'window of low taxes' for retirement plan withdrawals, advisors say," CNBC, published May 29, 2023, accessed January 18, 2024. Back
  8. Laurence J. Kotlikoff, “A Harvard-trained economist says 'early retirement is one of the worst money mistakes'—here's why you'll 'regret' it," CNBC, published August 12, 2022, accessed January 17, 2024. Back
  9. Mia Taylor, “Required minimum distribution mistakes to avoid," Fortune, published January 2, 2023, accessed February 26, 2024. Back
  10. Roger Wohlner, “Maximizing Retirement Plan Withdrawals," Investopedia, published March 13, 2023, accessed January 17, 2024. Back
  11. Jennifer McCloskey, “Philanthropy in Estate Planning," University of Delaware, n.d., accessed January 19, 2024. Back