If you are newly retired or getting very close to retiring, chances are that you are concerned about whether or not your savings "nest egg" will last you your entire lifetime. Here are some tips for new retirees to help alleviate these concerns:
1. Conduct a realistic assessment of your assets and liabilities.
If you don't have a good picture of your total net worth and sources of income, now is the time to make that assessment. It's the not knowing that leads to stress and worry. Even if your financial picture is worse than you thought, you could still take steps to rectify that situation, like finding part time work or moving to an area with a lower cost of living.
2. Have an emergency or "rainy day" fund outside of your retirement account.
Some retirement planners say retirees should have six months to a year of living expenses outside of the income from your retirement accounts. Project your expenses for the coming year for both best- and worst- case scenarios and make a plan on how to address any shortfall.
3. Have a spending plan.
Create a monthly budget for the year and stick to it. One of the biggest threats to new retirees' nest eggs is providing financial support for adult children. If you find your income is not enough to cover your own expenses, it may be time to limit or even stop that support.
4. Review asset allocation.
Recent volatility in the market has made many of us feel like we’re on a roller coaster. It may be a good time to check your asset allocation and take some time to rebalance the stock portion to better match your risk tolerance level.
5. Take care of yourself.
Modern medicine and mindfulness about taking care of our own health means more Americans are living longer; currently, the average life expectancy for a male is 79 and for a female, it’s 82. As you plan for your “golden years”, take into consideration that they may be longer than you even think.
6. Consider a charitable gift annuity.
An immediate charitable gift annuity (CGA) will turn part of your savings into a guaranteed lifetime stream of income for you and your spouse, and a portion of the income (representing a return of principal) will be tax-free for a number of years. And, with the recent increase in CGA rates, there has never been a better time!
This chart illustrates the financial benefits of a $10,000 CGA:
| Your Age | Your Rate | Your Age | Your Rate |
|---|---|---|---|
|
85 |
7.6% |
75 |
5.4% |
|
80 |
6.5% |
70 |
4.7% |
Want to learn more?
Contact David Toll, JD, senior associate vice president, in Drexel’s Office of Gift Planning at (215) 895-1882 or giftplanning@drexel.edu.