Three types of retirement income strategies to protect your nest egg
Once you are retired, you should be able to enjoy your life and not worry about financial security. However, not everyone invests sufficiently as much into their retirement, and a volatile market can affect your nest egg.
If you feel like your retirement nest-egg is at risk, you might need to evaluate your strategy to supplement your income and help keep your nest egg safe. Take a look below at some retirement income strategies you should try to help protect your nest egg.
Three retirement income strategies to protect your nest egg
- Use the “bucket system” — Unfortunately, it is a possibility that you might find yourself entering retirement during a bear market where conditions are down. This is not the ideal time to sell your securities. What you can do is invest your money using the “bucket” system. This is the practice of splitting your assets into three “buckets”: The “Now” bucket, the “Soon” bucket and the “Later” bucket.
Money in the Now bucket is money you will need for living expenses for the next year or two. The Soon bucket should cover your income for the next five to ten years and include a mixture of dividend paying stocks and high-quality bonds that you can sell and live off of when your Now bucket runs out.
The Later bucket is money you will not need to touch for a while. You can make more aggressive investments with this money to earn a higher growth potential. If the market is not doing well right now, it usually picks back up later, which can grow your Later bucket funds for when you are ready to use them.
- Delay your Social Security benefits — Most people need to be able to live off of 80% of their pre-retirement income during their retirement years. If your nest egg is able to comfortably cover this, consider delaying taking out your Social Security benefits.
You can claim Social Security when you are 62 years old, but if you take it before your Full Retirement Age, which is 67 today, if you delay them until later, such as when you are 70, your benefits can increase by 8% or more.
- Earn extra income — If you feel like you are dipping too much into your nest egg, you may want to consider finding a way to earn extra income. You can do this by taking on a part-time job or doing something more flexible like driving for Uber or Lyft. If you are a more creative type, you can sell arts and crafts on Etsy. It is easy to make an account and manage your Etsy profile, so you can focus more on creating and selling.
Plan your retirement with the help of a ProVise financial advisor
Whether you are nearing retirement or are already retired, the CERTIFIED FINANCIAL PLANNER™ professionals at ProVise Management Group can guide you toward making the right financial decisions. We will work closely with you to evaluate your current circumstances, your goals and your risk tolerance to help you make decisions that are right for you in the short-term and long-term. Our team can help you with a strategy to protect your nest egg that might include investing, earning extra income, delaying your benefits and more.
We can create a plan for you at a fiduciary standard of care and offer an unconditional money-back guarantee if you are unhappy with your written plan. Simply return it to us and we will refund 100% of the fee paid.
Are you ready to get the most out of your retirement with the help of a ProVise financial advisor? Contact ProVise today to schedule a complimentary consultation.