Making Your Money Last in Retirement

By Ziyah Esbenshade, CFP®, APMA®, CRPC®

Having spent decades saving for retirement, it can feel like a major shift for retirees to spend down their hard-earned assets. Many of these retirees are reluctant to dip into their principal for fear of running out of money due to the anticipation of increased healthcare expenses and other factors. If you share these concerns about the longevity of your savings, know there are steps you can take to help you feel more confident. Here are some tips to help you get started:


Understand the arc of retirement spending. Annual expenses generally are highest within the first few years of retirement. This is because retirees are often taking advantage of their newfound leisure time to pursue hobbies, travel, dine out and shop. Spending tends to slow down with advancing age. You may find it reassuring to realize there’s a good chance your lifestyle expenses in retirement could level out or decrease over time. 


Plan for healthcare costs. Healthcare is consuming an increasing proportion of many retirees’ income. You can start preparing for these expenses today by researching your insurance and savings options and developing a strategy to cover your needs. Your options could include a combination of the following: Medicare, Medigap supplemental insurance, health savings accounts (HSAs), long-term care policies, continuing health insurance through your current or former employer, and other dedicated healthcare savings. Having funds and protection in place can help you feel more prepared to handle a medical emergency or more routine care. 


Understand the level of risk in your portfolio. As you turn your savings into income, it’s important to review your portfolio and assess your level of risk. This means ensuring that you have a diversified portfolio that suits your anticipated spending and balances your needs for liquidity and growth. For example, consider having a year to several years of easily accessible investments to provide income in case of a market downturn or an unexcepted financial event in your life. At the same time, it’s important to also have investments that are positioned for growth, or at the minimum, keep up with inflation. Many retirees spend decades in retirement, so plan your investment strategy with longevity in mind. 


Devise a sustainable withdrawal strategy. A well-crafted retirement income plan can help you avoid running out of money and feel more confident about spending your hard-earned assets. Tally up your various sources of retirement income, which may include Social Security, annuities, retirement assets and other investment earnings. Then, decide which assets you will tap into first, and when you will claim Social Security benefits. Remember that at 72 years of age you are required to take required minimum distributions from your traditional IRA and employer-sponsored retirement plans, so work this income into your plan.


Consider the tax consequences. Reducing the tax bill on retirement income is a priority for a great number of retirees, yet many feel understanding the tax impacts of drawing down assets is complex. If you share these sentiments, starting the planning process early and seeking guidance from a tax and financial advisor can help you feel more secure in your strategy.  



Ziyah Esbenshade, CFP®, APMA®, CRPC®, is a Private Wealth Advisor and Senior Vice President with Pell Wealth Partners, private wealth advisory practice of Ameriprise Financial Services, LLC in Rye Brook, New York. She specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact her, visit, call 914.253.8800 or visit our office at 800 Westchester Avenue, Suite 300, Rye Brook, New York 10573.