I'm Retiring With $300,000. How Am I Supposed to Not Run Out of Money?
Key Points
You may not feel confident approaching retirement with just $300,000 saved.
With the right withdrawal strategy and supplemental income, you can make that money last.
- The $23,760 Social Security bonus most retirees completely overlook ›
As always, The Motley Fool cannot and does not provide personalized investing or financial advice. This information is for informational and educational purposes only and is not a substitute for professional financial advice. Always seek the guidance of a qualified financial advisor for any questions regarding your personal financial situation.
A lot of people start off their careers planning to save for retirement only for life to get in the way. After all, each decade of life can introduce new financial challenges.
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In your 20s, student loan payments might make it tricky to prioritize IRA or 401(k) contributions. In your 30s, saving for a home might be your primary objective. And in your 40s, you might spend a lot of money maintaining that home and dealing with rising property taxes and insurance costs.
If you're retiring with just $300,000 saved, you might assume that your senior years are doomed. And the reality is that $300,000 in retirement savings isn't a huge sum over what could be 20 or 30 years. But with the right strategy, you can stretch that nest egg so it doesn't run out.
Establish a safe withdrawal rate
If you don't want your retirement savings to get whittled down to $0, you'll need to figure out how much you can afford to withdraw each year. That percentage should hinge on your asset mix and retirement timeline.
If your portfolio has a fairly even split of stocks and bonds and you're looking at an average-length retirement, a 4% withdrawal rate may be fairly safe. If you're invested more conservatively or are retiring on the early side, a 3.3% or 3.5% rate may be better.
Carve out more supplemental income
The more income you have for retirement outside of your $300,000 in savings, the easier it should be to stretch that money. And you may have a number of options in that regard.
First, there's nothing saying you can't continue to work in retirement. And if you don't want to get a traditional job, you could instead pursue gig work or start a business.
Social Security could also supplement your savings nicely, especially if you delay your claim. For each year you wait past full retirement age, your monthly benefits get a permanent 8% boost.
Finally, if you have extra space in your home, you could look into renting out a room or finished basement. That may not be the ideal arrangement, but if you're single and start to miss the company of going to work, you may find that having another person living under your roof morphs into a positive thing.
A $300,000 retirement nest egg may seem pretty negligible. But if you withdraw from it carefully and top if off with other income streams, you may find that you don't come close to outliving your money.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.
View the "Social Security secrets" »
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