Crafting A Drawdown Strategy For Your Retirement
Carefully planning your retirement payout can help your savings last. If you're a disciplined investor, you are diligently saving for retirement using a number of investment strategies. But creating a drawdown strategy to ensure that your income lasts through retirement is just as important.
While each person's plan will look different, there are a few key considerations to keep in mind. Some investors worry about the unknowns, such as how long they'll live, whether they'll have large medical expenses and the rate of inflation. But no one can predict these. Instead, focus on the following to help you plan your strategy:
When Do You Plan To Retire?
If you hope to retire early, you need to make sure you have enough money saved and invested in your various accounts and decide when you will start taking Social Security benefits. You also need to think about whether you will fully retire or work part-time.
How Much Do You Need?
There are a number of ways to calculate how much money you need to live on during retirement. Think about the lifestyle you want to maintain, including discretionary spending on travel, entertainment and so on. One popular rule of thumb is to aim for a retirement income that is 75 to 80 percent of your pre-retirement income.
How Long Does Your Nest Egg Need To Last?
Thanks to advances in medical technology, the average time spent in retirement continues to grow. If you are in good health, you should plan for enough income to last up to 30 years. For the average married couple, there is a 45 percent chance one will live to age 85, and an 18 percent chance one will live to age 95 (according to the Society of Actuaries).
For help answering these questions and working on your drawdown strategy, contact your State Farm® agent.
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