Worried You'll Run Out of Retirement Savings? Here's What to Do

Saving money for retirement is not an easy thing to do. It often means making sacrifices along the way, whether in the form of working long hours for many years or giving up some of the things you love.

But as tricky as it is to build up a nice retirement nest egg, stretching that money can be a challenge, too. In fact, many retirees worry about running out of savings at some point in their lifetime, and it's a fear that could keep you from spending the money you've worked hard to accumulate.

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If you're worried about depleting your IRA or 401(k) too soon, you're not alone. But you can also take steps to mitigate that fear and enjoy the money you've worked hard for. Here's how.

1. Have a withdrawal plan

If you tap your IRA or 401(k) plan whenever you feel like it, your money may not last as long as you need it to. A better bet? Work with a financial advisor to come up with a withdrawal strategy that's suitable for you. That strategy should hinge on factors that include your retirement age, annual income needs, and personal goals.

For example, if you want to spend the first few years of retirement traveling before slowing down, that's something to talk to a financial advisor about. They can help you decide how much money you can safely withdraw early on to meet your goals without putting your long-term financial security at risk.

2. Make sure your nest egg is invested strategically

To be able to take a decent sum out of your retirement account each year, that money needs to be invested strategically. You may be inclined to move out of stocks completely in retirement to unload risk. But that could stunt your portfolio's growth, forcing you to limit your withdrawals and potentially getting in the way of your plans.

Once again, this is a situation where working with a financial advisor could help. They can take your income goals and needs into account, along with your personal risk tolerance, and help you come up with an investment mix that makes sense for you.

One thing you should aim to do either way, though, is load up on income-producing assets like dividend stocks and ETFs. It's also important to diversify your retirement investments for protection against market turbulence.

So if you're going to buy dividend stocks, for example, don't just concentrate on one market segment. Rather, branch out.

3. Keep plenty of cash on hand

The scary thing about keeping a good chunk of your retirement savings in the stock market is not knowing when the next downturn might hit. It can be stressful enough to ride out a stock market decline when retirement is years away. But it can be downright scary to deal with a market crash when you're retired and need your portfolio for income.

A good way to protect yourself in that situation is to keep about two years' worth of living expenses in cash. That gives you an opportunity to leave your IRA or 401(k) untouched during market declines, sparing you from locking in permanent losses that could put you at risk of eventually running out of funds.

With interest rates starting to come down, you may want to consider a CD ladder for some of your cash, with CDs coming due every three to six months. However, you should always keep several months of cash at a minimum in a high-yield savings account for easy access.

It's natural to worry about running out of retirement savings -- even if you have a lot. But remember, with the right withdrawal and investment strategy, you can lower those odds -- and buy yourself peace of mind.

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