Saved $750,000 for Retirement? Here's the Strategy to Prevent it From Running Out

There are plenty of people who reach retirement age without having built up much or any savings. So if you're about to retire and have a glorious $750,000 balance in your IRA or 401(k), consider yourself in pretty good shape.

That said, it probably took a lot of hard work to accumulate $750,000. So the last thing you want to do is risk running out of that money in your lifetime.

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The good news is that with the right strategy, you can stretch your retirement savings and enjoy the money you worked hard to stockpile. Here's how to make that happen.

1. Know what a safe withdrawal rate looks like

A big part of preserving a retirement nest egg is having an actual withdrawal plan. To figure out what a safe withdrawal rate looks like for you, you'll need to assess your investment mix and retirement timeline.

If your portfolio has a fairly even stock/bond split and you're retiring at a fairly typical age, you may be safe using the popular 4% rule, which has you withdrawing 4% of your savings in your first year of retirement and adjusting future withdrawals for inflation.

If you have a more conservative investment mix, you may need to accept a lower withdrawal rate, such as 3% or 3.5%. And if you're looking at a longer retirement because you stopped working on the earlier side and have great health and a family history of longevity, that, too, should signal that a more conservative withdrawal rate may be appropriate.

Of course, on the flip side, if you're retiring in your mid-70s, you may be able to start with a 4.5% or 5% withdrawal rate, since your savings may not need to last as long. But it's important to have a number to work with.

2. Adjust your spending for market conditions

You might think that once you've established your target withdrawal rate, you're all set. But it's important to adjust that rate for market conditions.

Let's say you decide to use a 4% withdrawal rate, which, for $750,000 in savings, would have you withdrawing $30,000 a year plus inflation adjustments. If the market falls 20% early on in retirement, though, sticking to that 4% rate could be dangerous.

If your investments lose 20% of their value, your $750,000 portfolio could be worth more like $600,000. A $30,000 withdrawal from a $600,000 portfolio is 5%, not 4%. And that difference is significant.

If you stick to your original withdrawal rate during a pretty substantial market downturn, you'll have to sell more assets to get the same amount of income. That leaves you with fewer assets in your portfolio to regain value as the market recovers.

In this example, what you may want to do is adjust your $30,000 withdrawal to $20,000 during a market crash by reducing spending in discretionary categories. You may not be able to leave your savings completely untouched. But by leaving that extra $10,000 in your portfolio, you're giving that money a chance to grow into a much larger sum once the market turns around.

3. Boost other income streams to take some pressure off your savings

If your needs are fairly modest and you have a decent amount of Social Security coming your way, you may find that you can live very comfortably in retirement on $750,000. But if you want to make sure that money doesn't run out, it helps to increase other income streams.

One option is to delay Social Security beyond your full retirement age, which is 67 if you were born in 1960 or later. Each year you hold off, your monthly benefits increase by 8% up to age 70.

Working part-time is another great way to generate extra retirement income. And thanks to the gig economy, you can do that work on a flexible schedule. That could mean working a few hours some weeks and more hours during periods when you're less busy. And if you're taking a cross-country road trip and don't want to work at all for eight weeks, that's fine too.

Retiring with $750,000 could put you in a pretty strong position to enjoy your senior years to the fullest. If your goal is to stretch that nest egg, start with a withdrawal strategy that's appropriate for your situation, adjust that plan as needed, and line up extra money to give yourself more wiggle room.

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