How to Make Your Nest Egg Last a Lifetime

by Charlotte Johnson

If you plan to retire someday, or if you've already retired, you probably know that having a nest egg is critical to maintaining financial stability in later years. Even if you have saved and invested money over the years, you may worry that your nest egg will eventually run out. Unfortunately, this does happen to some senior citizens, throwing them into a state of financial upheaval. Protect yourself and your future by practicing some strategies that will help your nest egg to last a lifetime.

1. Invest and save as soon as possible if you haven't reached retirement age yet. It would be in your best interest to consult a financial adviser who could analyze your specific financial situation and advise you on how much to invest and save, as well as how to do so. If you've already been saving and investing, continue to do so. You may even want to increase the amount that you are setting aside for savings and investments. The growth of your nest egg is directly related to your financial planning prior to retirement.

2. Wait until you are 65 or older to retire in order to receive the greatest amount of Social Security. If you were born after 1937, you can receive benefits as young as 62, but you need to be 65 to be considered "full retirement age." Your Social Security benefits will help to supplement your income so that you can utilize your nest egg more efficiently.

3. Set a conservative budget and stick to it. Try to limit your withdrawals from your nest egg to 3 to 5 percent. In order to do so, you'll have to spend your money wisely. Write down your necessary monthly expenses, such as rent and utilities. Then you can gauge how much will be left over for "wants" rather than "needs."

4. Purchase an annuity. This may or may not be an option for you, depending on how much you have saved. If you can afford to do so, use up to half of your nest egg to purchase an annuity. This will guarantee you a monthly payment. The longer you wait to receive payments, the larger your monthly check will be. You also can choose an annuity that offers variable payment options.

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