3 Things You Must Do If You’re Worried About Running Out of Money in Retirement | Personal-finance

Once you retire, you’ll need your IRA or 401(k) to continue generating growth. And a smart investment strategy can make that happen. You’ll often hear that it pays to favor safer investments, like bonds, during retirement, but in reality, you’ll still need a sizable chunk of your savings in stocks to generate more growth.

The extent to which you divvy up your retirement-plan investments will depend largely on your age and appetite for risk. If you have a moderate risk tolerance and you’re retiring in your late 60s, you may decide to keep about 45% to 50% of your assets in stocks initially, and the rest in bonds. The bond portion of your savings will generate lower returns most likely, but you may also benefit from regular interest payments that provide some stability.

3. Have a well-thought-out withdrawal strategy

Dipping into your retirement plan randomly is a good way to deplete it sooner than you’d like. Rather, you should come up with a withdrawal strategy before retirement.

For years, financial experts have talked up the 4% rule, which states that if you remove 4% of your savings balance your first year of retirement and then adjust subsequent withdrawals for inflation, your savings should last 30 years. The rule is a bit outdated at this point, mostly because it makes certain assumptions that don’t apply to market conditions today. For example, back when the rule was established, bonds were a more lucrative income stream than they are today due to higher rates. As such, while you shouldn’t necessarily adopt the 4% rule, you can use it as a starting point.