Having a Hard Time Spending Your Retirement Nest Egg? Here's What to Do

Key Points

• Sometimes, spending money can be as difficult as saving it.

• Establishing a withdrawal strategy you're comfortable with should help.

• The right investments could make it easier to continuously tap your savings.

Building up a retirement nest egg is not an easy thing to do. After all, it's tough to find money for your IRA or 401(k) when you have a gazillion other expenses to worry about.

You'd think that spending your nest egg would be a lot easier than accumulating that money. But surprisingly, a lot of people get to retirement excited to start tapping their nest eggs only to realize it's more difficult than expected.

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That hesitation largely boils down to a fear of running out of money. A recent Allianz survey found that 64% of Americans are worried more about depleting their savings than dying.

But the reality is that you deserve to enjoy the money you worked so hard to save. So if you're struggling to tap your 401(k) or IRA, here's what to do.

1. Establish a safe withdrawal rate

The more strategic you are in tapping your nest egg, the less likely you are to deplete it prematurely. To that end, you may want to work with a financial advisor to come up with a withdrawal rate you're comfortable with.

For years, financial experts touted the 4% rule as the gold standard for managing retirement savings. More recently, professionals have cautioned that a slightly more conservative rate may be more ideal, depending on interest rates and the way your portfolio is structured. It's important to have a plan either way so you can feel confident that you're preserving your savings while accessing the income you need and want.

2. Make sure your nest egg is producing income

In the aforementioned survey, 54% of respondents said that inflation is a contributing factor to their fear of running out of money. And that's a valid concern, which is why it's important to set yourself up with investments that produce income during retirement.

Although it's generally wise to scale back on stocks during retirement, it may not be a bad idea to keep a portion of your portfolio in dividend stocks. You may specifically want to focus on companies with a strong dividend-paying history for more stability.

Municipal bonds are another potential good fit for your portfolio due to the tax benefits and predictable income. And given interest rates today, CDs may be worth considering, too.

3. Remind yourself what the money is there for

A lot of people have a hard time tapping an emergency fund when surprise bills arise and end up having to pay off credit cards unnecessarily. But that's silly, because the whole purpose of having an emergency fund is to cover unexpected expenses.

Similarly, the purpose of having an IRA or 401(k) is to have income to use during retirement for whatever purpose you see fit, whether it's paying essential bills, improving your home, or taking vacations. As long as you're being careful with those withdrawals, there's no reason not to use that money for its intended purpose.

Spending the money you've worked hard to save in retirement is easier said than done. But it's important to remember why you made the effort to build that nest egg and enjoy it to the fullest.

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