Three Planning Ideas to Make Your Money Last in Retirement

It’s National Retirement Security Month, a good time for everyone to consider developing strategies to help them protect against outliving their retirement funds.

A crystal ball sits on the beach with a sunset in the background.
(Image credit: Getty Images)

How clear is your crystal ball? Mine isn’t very reliable. And that’s too bad, because it would be so helpful if we could see into the future — especially when it comes to retirement planning.

One of the biggest priorities in retirement is figuring out how much money you’ll need to live the life you want. Planning is a necessity, of course, and there are effective strategies to accumulate money to use when living out your golden years.

But barring a major development in crystal ball technology, none of us really knows how long we will live. And that poses an interesting challenge: How to plan your retirement with the confidence that you won’t outlive your money.

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With October being National Retirement Security Month, it’s a good time for people to think about “longevity risk” and developing strategies to make their retirement funds last. After all, what good is a nest egg if it runs out before you do? Or, equally tragic, what good is your hard-earned savings if you underspend and under-live from fear of running out?

Better planning equals better outcomes

Over the past few decades, there has been a shift from pension plans to 401(k)s and other defined contribution retirement plans. That puts more responsibility than ever on the shoulders of individual investors and their financial advisers. When you factor in higher market volatility and bring into the picture the potential for market drops in early retirement years, you’ve just poured gasoline on the fire.

It’s no wonder so many people are worried about running out of money and not being able to live the life they want in retirement. They guess how long they’ll live and usually guess short. A strategy that incorporates a stream of protected lifetime income in your portfolio will guard against longevity risk and help take the guesswork out of the equation.

I encourage you not to “wing it” and instead build a retirement plan that you feel confident in and have the resiliency to follow. Every industry insider knows that better planning will drive better outcomes.

Planning idea No. 1: Lifestyle is important

Your plan should include flexibility to account for different and changing lifestyles — things like delayed retirements, part-time work and staying longer in lifelong homes. Defined contribution plans, interest-bearing personal savings products (like money market funds), investment vehicles and insurance-based protection strategies can all play key roles in generating sustainable lifetime income to meet desired outcomes.

Planning idea No. 2: Knowledge is power

It’s important to educate yourself about available products and solutions in the marketplace. Lack of preparedness and education can result in having to make spending cuts that could compromise your desired retirement lifestyle. Let’s make sure that’s not the case.

Annuities, for example, are vehicles that can help improve retirement security. But they’re not for every person or every situation. For many, though, protected accumulation strategies guard against downside risk, insulating assets from the effects of market volatility, while generating predictable income streams for fixed expenses, thus helping to protect the retirement outcomes of tomorrow.

Planning idea No. 3: You don’t have to go it alone

So, you’re open to some help but don’t know where to start? The good news is there are many tools and resources to help you plan your retirement, with a trusted financial adviser being at the top of the list. An adviser will likely start the conversation by asking about your desired outcomes. If you’re clear on the outcome, then it will be easier to make choices from a range of options and strategies.

If you’re not quite ready to speak face-to-face, there also are online tools that can help you get going. Web-based solutions like Prudential Stages for Retirement can help unlock your Retirement Confidence Score and see personalized projections of your retirement income and spending over time. Then, if you’re ready to kick things up a notch, you can connect more deeply with a financial adviser to help you define, refine and realize the retirement you envision.

Remember: There’s no time like the present

As we turn the page on another National Retirement Security Month and dive into the remaining weeks of the year, now is an ideal time to think about building an all-weather retirement plan so you’re confident in reaching your goals. If you don’t start today, you’ll just be a day later and a dollar shorter when you do. Good luck on your retirement planning journey, and remember, you’ve got this!

This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. If you would like information about your particular investment needs, please contact a financial professional.

Annuities are issued by The Prudential Insurance Company of America, Newark, NJ, and its affiliates.

A variable annuity is suitable for long-term investing, particularly when saving for retirement; however, it is possible to lose money investing in securities.

Annuity contracts contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your licensed financial professional can provide you with complete details.

Prudential Stages is an umbrella marketing name for Pruco Securities LLC (sometimes referred to as “Pruco”) under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate agreement. Investment advisory products and services are made available through Pruco, a registered investment advisor. 1074700-00001-00

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Dylan Tyson
President, Prudential Retirement Strategies, Prudential Financial

Dylan Tyson is president of Prudential Retirement Strategies, which delivers industry-leading retirement strategies for growth and protection. Retirement Strategies serves more than 2 million customers and provides retirement income of more than $15 billion annually. Tyson received his bachelor’s with high honors from Stanford University, and an MBA from the Anderson School at UCLA. He is a CFA® Charterholder.