4 Steps to Make Your Money Last a Lifetime
From the Dinar Recaps Archives originally posted on 5/30/2019
4 Steps to Make Your Money Last a Lifetime
By Jane Bryant Quinn, AARP Bulletin
A simple, easy-to-use formula to make sure you never run out of cash
As a financial columnist, I get asked the same heartfelt question over and over: “How do I make sure I don’t outlive my money?” And that makes sense. Surveys confirm that the No. 1 worry among older Americans is running out of cash.
Fortunately, financial planners have come up with sound ways to prevent this. Collected here are their key rules for maintaining a livable income for life, plus case studies that show how to put these general rules into action. The goal is your peace of mind — knowing that you’re getting the most from the money you’ve saved and that you’ll always have enough.
The Magic Number
The key to long-term planning is knowing one essential number: how much money you can afford to spend annually. From there, you can adjust your expenses to fit.
You may be tempted to reverse the order — estimate your future expenses, then adjust your investment assumptions to make that spending appear possible. But that’s wishful thinking: a hope that big investment returns will rescue your budget. It leads to overspending early on, and regret later.
Instead, let’s focus on the real, guaranteed money you’ll have. There are two main sources:
Your personal savings and investments.
Your guaranteed income from other sources.
Download this worksheet to help you find your sustainable income. The key steps:
Step 1: Tally Your Guaranteed Income
The most common source is Social Security, which you may already be collecting. (If you’re not, get an estimate by calling Social Security or by opening a My Social Security account at ssa.gov.) You might also have a pension or annuity.
If you own a reliable rental property, include the amount of rent you receive after expenses.
To continue reading, please go to the original article here:
https://www.aarp.org/retirement/retirement-savings/info-2018/make-money-last-lifetime.html