Retirement Investing: 5 Ways To Make Your Money Last 10 Years Longer
Written by
Angela Mae
Edited by
Amber Barkley
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The cost of retiring comfortably in the U.S. is in the millions, at least in many parts of the country. In Hawaii, for example, you’ll need over $3 million for a 20-year retirement, a recent GOBankingRates study found.
While some places are generally cheaper to retire, such as Louisiana — $499,020 for a 20-year retirement — and Arkansas — $489,937 for a 20-year retirement — stretching your retirement funds is no small task. It’s doable, however. You just might need to get a bit creative.
Here are the top ways to make your money last an additional decade or so in retirement, according to experts.
Get an Annuity With a Lifetime Income Benefit Rider
According to Mark Charnet, founder and CEO of American Prosperity Group, it’s possible to stretch your retirement savings by getting an annuity with a lifetime income benefit rider.
“A lifetime income benefit rider can create a minimum amount of income that could possibly rise with performance over the years,” he said. “Lifetime benefit riders are backed by insurance companies.”
This option can be especially useful as the average life expectancy in the U.S. continues to rise. By adding an income rider to a deferred annuity, you’ll get guaranteed lifetime income. You also get additional protection against market declines.
Get an Income Guarantee
It’s important to make sure the income you receive is enough to cover your minimum expenses, even in the event of a market downturn. Back in the day, an old-school pension plan would have been a simple solution to this. Since these are now harder to come by, you might need to go with something else.
“A combination of smart Social Security planning and leveraging products like annuities for guaranteed income to cover your non-negotiable monthly expenses can free up the rest of your portfolio to continue to thrive in the market and cover the more flexible and leisure expenses,” said Adam Tolliver, CFP, ChFC, of Artisan Financial Strategies.
Create a Buffer Asset
Having a buffer asset — one that’s not exposed to as much market risk — can also prolong your retirement funds.
“The most traditional retirement income strategy is to withdraw some presumably safe percent of the overall account down each year to support your income needs. Let’s say it’s 4% for this example,” said Tolliver. “A 4% withdrawal may work out fine in most years, assuming your portfolio returns are greater than your withdrawal rate.
“But over a 20- or 30-year retirement period, there are bound to be at least a few years when that isn’t the case, and we don’t have the luxury of knowing when those years are in advance.”
The buffer asset can protect you financially during market downturns.
“In years when the market performs below 4%, or we even suffer market losses, having a non-market correlated asset to pull income from will allow your primary retirement portfolio to recover,” said Tolliver. “We often aim for clients to have 3-4 years’ worth of expenses accumulated in such an asset to create the flexibility and add a layer of protection to their portfolio.”
Choose Alternative Investment Strategies
It’s not all about having a 401(k) or Roth IRA. If you want to be more financially secure, diversity is key.
“REITs are a great option for investing in real estate without the hassle of property management or house flipping,” said Yehuda Tropper, CEO and life insurance and life settlement advisor at Beca Life. “Many of my clients have also found success with laddered bond strategies, which provide predictable income while managing interest rate risk.”
Purchase Permanent Life Insurance
Permanent life insurance is another way to stretch your retirement funds even further.
“For those with permanent life insurance policies, life settlements can provide substantial lump sums to reinvest for higher yields,” said Tropper.
Since every policy is different, it helps to compare several options before choosing one.
How Long $1 Million Lasts in Retirement
Back in the day, $1 million was considered enough to retire on. Today, the financial landscape in the U.S. looks a little different.
Curious about how long $1 million will last in retirement? Here are some key results from a 2024 GOBankingRates study:
- Hawaii — 9 years, 7 months, 25 days
- New York — 13 years, 8 months, 1 day
- Vermont — 15 years, 0 months, 19 days
- Colorado — 16 years, 2 months, 4 days
- Virginia — 17 years, 0 months, 22 days
- Wisconsin — 18 years, 1 month, 16 days
- Michigan — 19 years, 0 months, 4 days
- West Virginia — 20 years, 3 months, 19 days
The good news is you can keep your money working in retirement via investments. If you’re not sure how to go about this, speak with an investment or financial advisor. They can advise you on your options.
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