Worried About Outliving Your Retirement Savings? 4 Key Moves to Lower the Odds.

There's lots to worry about in the context of retirement -- surprise home repairs, health issues, and the reality of being bored. But one fear people tend to share in the context of retirement is outliving their savings.

And unfortunately, it doesn't matter whether you retire with $400,000 or $4 million. If inflation surges for many years and the market underperforms or experiences severe crashes, you could end up whittling down your savings even if you're careful.

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But as scary as that may sound, the good news is that there are steps you can take to avoid that fate. Here are a few critical moves that could lower your chances of outliving your retirement savings.

1. Delay your Social Security claim

Once you turn 62, your Social Security benefits are on the table. And you can collect those benefits without a reduction once you reach full retirement age, which is 67 for anyone born in 1960 or later.

However, if you're willing to delay your claim past that point, there's a huge upside. Each year you hold off boosts your Social Security checks by 8%, up until age 70.

The more money Social Security pays you each month, the less of a need you should have to tap your savings. And also, Social Security is eligible for a cost-of-living adjustment, or COLA, each year. So if inflation ends up surging during retirement, the larger your benefits are, the more of a boost you should get once those COLAs are applied.

2. Buy an annuity

An annuity is a contract you sign with an insurance company that's meant to guarantee you income for life in exchange for a premium you pay. If you're worried about running out of money, converting a portion of your savings to an annuity could help mitigate that fear.

That said, annuities aren't right for everyone, and they can come with serious drawbacks. Agents who sell annuities often take high commissions, and the fees attached to them can be both large and complex. Also, if your annuity doesn't have inflation adjustments, the payments you receive could lose purchasing power over time.

It's important to do your research before buying an annuity, especially since there are different types. But you may find that converting some of your savings to an annuity gives you peace of mind.

3. Choose the right investment mix

Inflation has the potential to erode your savings, especially if it remains elevated for many years during your retirement. A good way to avoid whittling down your IRA or 401(k) is to keep a portion of your portfolio invested in the stock market.

It's a smart idea to scale back on stocks in retirement to limit your exposure to volatility. But keeping a chunk of your assets in stocks could allow you to benefit from share price appreciation during strong market years.

It's also wise to focus on companies with a strong history of paying and increasing dividends. That extra income, combined with share price growth, could help your portfolio stay ahead of rising costs, thereby reducing the risk of running out of money.

4. Maintain a cash cushion for market downturns

The stock market might crash once, twice, or several times throughout your retirement. And if you continue tapping your portfolio each time that happens, you could risk running out of money. A cash cushion can offer protection against that.

If you maintain a large enough cash balance to cover two to three years of living expenses, during that time, you'll be able to leave the stock portion of your portfolio untouched if it's declined in value. And if that's the case, you might get through an extended market downturn without losing so much as a dollar.

The idea of running out of money in retirement is terrifying. But with the right plan, you can lower that risk significantly.

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