Five creative ways to stretch your retirement dollars

You’ve been planning for retirement, and even have savings outside your employer’s plan, but are you saving enough?

Try these innovative methods to help ensure your funds last throughout your retirement.

According to a recent survey from the American Institute of Certified Accountants Public Accountants (AICPA), the top concern among people planning for retirement is running out of money. The biggest factors they believe can lead to this shortfall are health care costs (76 percent), market fluctuations (62 percent), and lifestyle expenses (52 percent).1

Their concerns are well-founded. A study from the Society of Actuaries found that people often underestimate how much money they’ll need in retirement or fail to build an adequate cushion to protect themselves from unexpected changes. As a result, about one-quarter of retirees risk running out of money.2

If you’re like most people who are planning for retirement, you’re probably concerned about outliving your savings. The best way to avoid this is by consulting with your financial advisor to ensure you’re saving enough and investing correctly to meet your future needs.

But there are also a few strategies you may not have considered before. Let’s look at the actions you can take now to get more out of your retirement money.

Profit through downsizing

When you own a home, you’re sitting on a great deal of value that can be used to your advantage, especially if, like many retirees, your kids have moved out and you have more space than you need. If you sell your home and downsize to a less expensive residence, you can then reinvest the profits from that sale to create an additional income source. Profiting from the sale of a home can make you liable for capital gains and recapture taxes, but there are ways to limit your exposure, such as putting the money toward an investment property.

Make Social Security work harder for you

Social Security is the only source of income that’s institutionally guaranteed to never run out. Even if you’re not planning to rely solely on Social Security for your retirement, why not find ways to boost how much you’re getting? To maximize your Social Security benefits, you should:

Make sure you have at least 35 years of covered earnings

The Social Security system uses the average indexed monthly earnings from 35 years of your career to calculate the value of your benefits.

Claim spouse-related payments

When both spouses are over age 62 and one claims retirement benefits, the other can claim the spousal retirement benefit, which may be higher-paying than their own benefits.

Adjust your withdrawals

Traditionally, the recommended rate of withdrawal from retirement savings and investments has been pegged at around four percent per year, which would allow your savings to last for about 30 years. However, this rule doesn’t always stand up to scrutiny, as your investment portfolio might outperform despite lower projections or you might need to spend more sometimes due to unanticipated expenses. Instead of using a set number, be ready to make frequent, gradual adjustments to your withdrawal rate to meet your needs for the year. Meet with your financial advisor annually or semi-annually to help you determine your limits.

Buy against inflation

Inflation can be a major source of trouble for retirees because it drives down the real value of savings and reduces purchasing power — an effect that’s exacerbated by higher rates of inflation in certain categories, like health care, a high-spend area for retirees. Fortunately, there are certain types of financial products to help mitigate the effects of inflation, such as Treasury Inflation-Protected Securities , which are adjusted based on the Consumer Price Index and increase in value to offset inflation.

Reevaluate your asset allocation

Depending on your time horizon, age, risk preferences, and need for liquidity, you might want to rethink your balance between stocks, bonds, mutual funds, annuities, and other assets. Market conditions can fluctuate, so you should be ready to reexamine your investment portfolio to reduce your exposure to a downswing, or be willing to take some risks if you need to make up for a shortfall.

Finally, remember that even though three-quarters of retirees worry about running out of money, only a quarter of retirees are at serious risk of doing so. Through a combination of careful planning, a willingness to receive financial guidance, and some creative approaches to saving, you can help future-proof your retirement.

1 “Q1 2015 AICPA CPA Personal Financial Planning Trends Survey.”  American Institute of Certified Accountants Public Accountants. 2015.

2 “The Impact of Running Out of Money in Retirement.” Society of Actuaries, Urban Institute, WISER. November, 2012.