The biggest fear of people 50 years of age and older is running out of money in retirement. When you get to retirement, a major shift takes place or should take place in your life financially. For 30, 40, 50 years you’ve been saving and mounting up that big lump sum and then you move over into retirement and the emphasis now is income. Are you going to have guaranteed income for the rest of your life? Is the amount of money that you’ve saved going to allow you to live throughout your retirement for as long as you live without ever worrying about running out of money? When you get to retirement, you’ve still got to deal with taxes, inflation and maybe more than ever healthcare, so it’s a legitimate concern that needs to be addressed.

Today, I’m going to give you five things that could help you lower that level of fear so that you don’t have to worry about running out of money in retirement. The very first thing you need to do if you want to make sure and not run out of money in retirement is have a budget. Know what you need each month in retirement. Now, how do you find that out? Well, you track your spending and you can track it forward or you can track it backwards. I encourage you to do both. I encourage you to track your spending backwards by looking at your checking account, your credit cards, and every single thing that shows where your money went over the last 3, 4, 5, 6 months, and that will give you a monthly average of what you’re spending.

Now once you know that, you can prioritize. What’s the most important thing for me to spend? A lot of people do a budget when they come in and we start building them a retirement blueprint and they’re like, wow. They’re overwhelmed with what they’re spending. So they go through a process of prioritizing their spending and maybe cutting down on some of the things that maybe they do it this way, but they could do it a little bit different and they could save a lot of money. It’s never the big things. It’s always the little things. And I want to also let you know too, that once you get this budget, it constantly needs to be reviewed and revised because things change in life as you go through life.

The number one thing you need to do to make sure you don’t run out of money is get a plan, and that plan is called a budget. Know what you’re spending each month. The second-biggest thing for most people to make sure your money lasts all the way as long as you do is make sure you optimize your social security. A lot of people talk about maximizing. That’s just simply waiting till it’s as big as it can be at 70 before you take it but you might not have that luxury. So the biggest thing is you need to understand social security, the ins and outs of it. If I turn it on early, what happens? If I wait until it’s later in my life, what happens? If I wait until I’m 70. And also you need to say, what other investments will I draw on or will I draw those down too much if I depend on those while I’m allowing my social security to grow? So understanding it, timing it for what’s best for you.

Real big point here. Your friends can give you advice as to their situation and they’re all telling you the truth. But your situation is entirely different than anyone else’s on the planet. You need your own social security plan. It needs to be specific to you and you need to stay aware of it before you just jump in and you do something with social security. Carpenters have a saying, we need to measure twice and cut once. You save a lot of lumber that way. And the saying means this, if you measure once and you cut it incorrectly, then you’ve wasted that piece of lumber. But if you measure twice, there’s a much stronger chance that when you do make the cut, you’re going to do it right. If you understand social security in and out and in and out, so much so that you’re tired of understanding social security, that’s probably the right time for you to decide. Make a decision as to when you turn yours on.

The third thing you can do to help yourself, make sure your money lasts in retirement, probably has nothing to do directly with finances. You need to maintain your health, you need to watch your health. I can’t encourage you enough to exercise daily on a regular basis. A lot of people have Apple watches. I have one. And they have an Apple Watch because it tells them how many steps they’ve taken in a day, and that’s just a constant reminder. At the end of the day, if I’ve maybe not been as active, maybe I’ve had too many meetings and I haven’t been moving around a lot, it’ll tell me. You’ve only had 4,000 steps and you need to set a goal of maybe 7,000, 8,000, maybe even 10,000 steps a day. Exercise regularly.

The second thing is watch your diet. I mean, all fried foods and all greasy foods is not necessarily good. You might need to throw in a salad every now and then. And I realize as you may be alone and you may just be the two of you, it’s hard to prepare a full-fledged meal, but just watch what you’re putting in your body. Are you putting in fuel as though you’re dealing with a Yugo or a Pinto or some of those vehicles that are just not too promising? Or are you treating your body like a Maserati?

You need to treat your body like it’s a Maserati and put the right stuff in so that you can live a long time and not have to go to the doctor all the time. But, you need to go to the doctor for regular checkups. We ask our clients often, how long has it been since you had a physical? It’s not unusual for them to say, “I don’t know, three or four years.” They always tell me the same thing. Well, one of these times they’re going to tell you something different and you need to hear that different report as soon as you can. So maintain your health. That’s the third way to help make sure your money last.

So how to make your money last. We’ve talked about having a budget, optimizing your social security and maintaining your health because if you maintain your health, you won’t have to spend as much money on maintaining your health and you’ll be below average for what normally people spend in retirement. So really crucial things. The fourth thing you need to do is you need to guarantee your income. I mean, everybody loves the fact that you’re going to get a social security check. It might go down a little bit in nine or 10 years, who knows what’s going to happen. But you’re going to get a social security check every month for the rest of your life.

Everybody loves the fact that they’ve got a pension. Well, say you don’t have one. A lot of people don’t. But those of you who do you know that you have a pension and that’s guaranteed income coming in every single month of your life for as long as you live. And some people have enough with their pension and with their social security, but some people don’t. So if you don’t have enough of those regular flows of guaranteed income coming in, that’s where many people are finding a fixed indexed annuity comes in with part of their retirement savings. We recently had a couple came in just this week and they had $1.5 million and they needed to put 600,000 of that into a fixed indexed annuity, and that would give them guaranteed increasing income for as long as either one of them were alive even after they ran out of money.

Now, if they leave that money in an IRA and it runs out of money, they’re out of money. But if they leave that money in a fixed indexed annuity, 600,000 of their 1.5 million, they’ve got 600,000 dedicated to their paycheck, and it gives them the guaranteed increasing income for as long as they live. And they’ve also then got $900,000 for their playcheck to go enjoy their go-go years and really relax and say, “Hey, I don’t have to worry about running out of money when I’m 85 and 90 because the fixed index annuity fills in the gap.”  The gap is the amount of money that is needed for income after you factor in your social security, pensions, and other sources and see that there’s a gap. That’s where that fixed indexed annuity comes in.

So the fifth way I want to talk about today about making sure your money lasts is make sure you’re not paying any more than you’re legally required to pay in taxes. Taxes are monumental. Some people do Roth conversions. That’s where once your tax brackets go down, when maybe you’re not making as much money in retirement, then you start converting IRAs and paying extra tax now because you think maybe taxes will be higher in the future. So you convert those over into a Roth and you never pay tax on them again in your lifetime. If you are single, you pass that to your heirs and they don’t pay tax in their lifetime. If you’re married, you pass that on to your spouse, they don’t pay tax in their lifetime. Nobody pays tax on it again.

Roth conversions are really big. Making sure you’re taking money out of the right taxed bucket. Is it already been taxed and you’re just paying tax on the growth or are you taking that out of an IRA where you’re paying tax on every single penny that comes out? Taxes can kill you. If you don’t have your own tax plan, the government has one for you. And I’ll guarantee you, you can build one that will allow you to pay less tax through your retirement if you just build a plan.

So five ways to help stretch your money, and I can give you more next time. But five ways to help stretch your money is have a budget. Make sure you’re getting the most out of your social security. Make sure you’re doing the best you can to maintain your health. Make sure you’re guaranteeing your income, and make sure you’re paying as little as you’re legally required to pay in taxes. The one thread that runs through all five of those is have a plan. Have a way. Have something you’re working on. We call it at Mosley Wealth Management, a retirement blueprint. If you want to find out how you can get your own retirement blueprint, go to our website, sign up. Come in and see us and we can help you get your own retirement blueprint.

Hey, if you like this podcast and you want to know more about a retirement blueprint, reach out to us. Like our YouTube channel, subscribe to us, pass it on, and check back here every week. If you’ll give me eight to 10 minutes, I’ll do my best to increase your financial knowledge, and help you ease into retirement.