Managing Your Retirement Funds for Life

Over the span of many years, you've built your nest egg through savings, investments, and Social Security. With good planning, that nest egg should provide you with a steady stream of retirement income over many years but devising a good plan is tricky since you don’t know how long you will need that income or what financial markets will do.

How do you know how much you can spend and how much you have to save for later?

“In an ideal world, we’d all max out our eligible contributions to our IRAs (traditional and Roth), employer-sponsored retirement plans, and any other tax-advantaged accounts (such as 529 education savings plans and health savings accounts) we own,” says Brian Martucci, a personal finance expert at Moneycrashers.com. “In the real world, most of us can’t afford to do that. Instead, the best we can do is follow a vague and unsatisfying rule of thumb: contribute as much as possible to each of these accounts without cutting out basic necessities or failing to maintain a robust emergency fund. The key to living by this advice is to constantly reevaluate discretionary expenses and be ruthless about reducing or eliminating those that don’t improve quality of life.”

Martucci says that once you hit retirement, the advice is more straightforward: withdraw no more than 4 percent of your nest egg each year. He notes that some financial experts are more conservative, drawing the line at 3 percent or even 2.5 percent. But 4 percent is generally acceptable for people who retire at or after age 65.

Diversify your portfolio for the best returns

What’s the best mix of investments? The best balance of risk vs. return?

“For most investors, low-cost target-date mutual funds or exchange-traded funds (ETFs) offer an appropriate balance of risk and return,” says Martucci. “These instruments automatically adjust their holdings as your retirement date approaches and your appetite for risk decreases, shifting from mostly stocks to mostly fixed-income instruments without any action on your part.”

Regardless of your risk tolerance, however, you’ll want to minimize your financial risk as you get closer to retirement. He says investors should build a core of lower-risk, lower-return protection through fixed-income funds and possibly annuities.

Bear in mind, however, that annuities can be complicated. Martucci says investors should speak with a fiduciary financial advisor before putting money into annuities.

Invest in your future with Erickson Senior Living

Moving to an Erickson Senior Living community is a wise financial decision, offering exceptional value for the money. To learn more, find a community near you to request more information or schedule a tour today!