Four Tips For Better Managing Your Retirement Budget
North American Precis Syndicate
With proper planning, you may have more cash for your golden years. (NAPS)
(NAPSI)—A recent survey by Ameriprise
Financial found that 68 percent of retirees with at least $100,000 in assets
have not yet taken money out of their savings, beyond what they must withdraw
as part of the IRS’ required mini-mum distributions from their retirement
It turns out that the transition from saving money to living off of those
assets is much tougher for seniors to navigate than many realized. The Ameriprise survey found that just one in five seniors say
they feel “confident” about how to draw down their retirement
savings, leaving them fraught with uncertainty about how to manage their
Here are four tips that personal finance experts recommend for tapping
that nest egg and making the most of your retirement years:
1. Revisit your monthly expenses.
Many people do a good job of tracking their spending in their preretirement years and establishing projections for what
they anticipate they will spend in retirement. But it’s important to
revisit those estimates and use your actual expenditures to fine-tune your
average monthly expenses. This will give you a more precise handle on your
spending needs and might also identify some areas where you can reduce
2. Consider the bucket approach to
income. A common approach to the asset withdrawal phase of retirement is
to establish a “bucket strategy.” This approach involves breaking
your nest egg into three buckets: (1) The Cash Bucket (one to three years of
short-term income); (2) The Income Bucket (five to eight years of medium-term
income); and (3) The Growth Bucket (10+ years of long-term income). As each
of the first two buckets gets low on dollars, you replenish them with assets
from the others. This helps you achieve stability in your cash flow and
increases peace of mind.
3. Maximize the value of your
assets. In addition to savings accounts and retirement accounts, you may
have the ability to unlock value from assets that you didn’t consider.
For example, if you own your home, a reverse mortgage can free up cash for
you while you still live there. Many seniors are surprised to learn that one
potential asset for generating immediate cash is a life insurance policy. It’s
your personal property, so you have the right to sell it anytime. When you
sell a policy—something called a “life settlement”
transaction—you get a cash payment and the purchaser assumes all future
premium payments, then receives the death benefit. Candidates for life
settlements are typically 70 or older, with a life insurance policy that has
a death benefit of at least $100,000.
4. Keep a backstop in place.
Financial advisers often recommend that you keep a cash backstop in place of
perhaps 12−18 months’ worth of living expenses. This will help
cover unexpected costs (the biggest risk factor is health care expenses) and
provide you with some reassurance that you can weather a sudden big-ticket
item without having to cancel that long-planned vacation. Remember, it’s
your retirement; pay yourself first.
For seniors who have fine-tuned their expense budget, allocated their
income into buckets that ensure cash flow, maximized the value of their
everyday assets and put in place a cash backstop, there’s no reason to
hesitate to draw down your retirement accounts anymore. Just stick to your
plan and stay the course.
For seniors who need additional cash flow for retirement, if they own a
life insurance policy that they no longer need or can afford, they may be
able to boost their retirement savings by selling that policy for immediate
For facts about life settlements, visit www.LISA.org
or call (888) 891-8383.
“Many seniors are surprised to learn they can sell a life
insurance policy in a “life settlement” transaction for cash. The
purchaser assumes all future premium payments and gets the benefit. http://bit.ly/2MPOzMM”
On the Net:North American Precis Syndicate, Inc.(NAPSI)