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The ultimate goal of saving after retirement is to preserve your capital while generating enough income to support your desired standard of living. Done well, you can achieve this while also factoring in the cost of inflation, your own risk adversity, and other changing personal factors.
In this article, we’ll unpack practical saving strategies after retirement that may prevent you from outliving your savings.
When planning for retirement, it’s best practice to follow the $1,000 per month rule. Assuming an annual withdrawal rate of 4–5%, you’ll need to save approximately $240,000 to generate a monthly income of $1,000.
But to prevent the possibility of outliving these savings, it’s essential that you continue saving during retirement. Contributing to your portfolio will guard against inflation, cover healthcare expenses, and ultimately ensure lasting financial security.
Saving strategies after retirement rely on five foundational principles — let’s explore them.
Spreading your deposits across various assets reduces the impact of any single contribution's poor performance. This diversification helps you weather market volatility and general economic uncertainty — particularly over the mid to long-term.
In your portfolio, diversification can take multiple forms:
Each type of investment has its own tax implications. Left unaccounted for, these costs can erode your earnings and make your income streams less stable.
Beyond taxes, investment-related fees merit ongoing attention. Even seemingly modest charges — like expense ratios, advisory fees, and transaction costs — may reduce earnings over time.
As a precaution, retirees should regularly review tax and fee structures and research lower-cost options.
Retirement often spans two or three decades. Over this period, it can be challenging to consider both day-to-day financial needs and long-term growth.
To get this balance right, retirees commonly aim to maintain a mix of income-producing and growth-oriented saving products. For instance, while cash and bonds can cover near-term expenses, equities or long-term annuities may help offset inflation.
The only thing that’s certain about the market is that it’ll fluctuate, so ensure this volatility doesn’t invoke panic-driven decision-making. Emotionally charged reactions can lock in losses and reduce long-term cash flow potential. Instead, maintain a disciplined approach and seek professional guidance when rebalancing assets.
A few strategies for combating these changes include:
Sometimes, the unexpected happens, and having liquid assets helps you address changing circumstances.
Retirees commonly hold several months’ worth of living expenses in readily available accounts, such as cash, short-term bonds, or easily marketable securities. This can help cover urgent costs without tapping into longer-term investments at unfavorable times.
The following five saving options produce a sound, well-diversified portfolio after retirement.
Annuities are contracts between you and an insurance company that will provide you with timed payouts.
These accounts can come in multiple forms, including the following:
Each type of annuity caters to distinct goals, risk tolerances, and time horizons. This gives you the flexibility to align your income strategies with your personal comfort levels and financial objectives.
Associated costs can vary depending on the product, insurance provider, and added riders. While traditional annuities come with high fees, you can purchase annuities directly online with Gainbridge® — eliminating hidden fees and commissions by cutting out expensive middlemen.
Equity index funds follow the performance of a chosen stock index, such as the S&P 500®. Generally, you’ll earn income from periodic dividends and capital gains generated by the underlying stocks within the fund.
By spreading money across several companies, equity index funds help retirees benefit from market growth without relying on a single business. Plus, the fees often run lower than actively managed funds, leaving more money in your pocket.
Still, these funds will rise and fall with general market conditions, and these portfolios don’t produce fixed payouts.
Bonds are debt securities issued by governments, municipalities, or corporations to raise money. Purchasers earn regular interest payments and get their principal back when the account matures.
For many retirees, bonds can offer a degree of predictability, since they deliver regular income with less dramatic price swings than stocks. Yet, bond prices typically fall when interest rates rise, and inflation can erode the purchasing power of a fixed income stream. To mitigate such risks, it’s common practice to invest in different types of bonds.
Dividend stocks represent ownership stakes in companies that give a portion of their profits to shareholders, often on a set schedule. For retirees, this arrangement can be a reliable paycheck that covers everyday expenses. Plus, many dividend-paying companies have decades-long track records, which may comfort those who value a sense of stability.
Still, it’s not a risk-free approach: Dividends can be cut if a business faces financial strain, and share prices often follow market trends. Even so, when carefully selected, dividend stocks can be a strong addition to your portfolio.
A certificate of deposit (CD) is a time-bound deposit account offered by banks and credit unions. It usually pays a fixed interest rate for a set term, with the principal returned at maturity.
Many retirees appreciate the steady, predictable returns and government insurance that usually accompany CDs. However, in these agreements, funds are locked in until the term ends, and early withdrawals may incur penalties. And these accounts may not keep pace with rising costs of living.
For many retirees, income annuities are the answer to savings woes. ParityFlex™ is a multi-year guaranteed annuity with a built-in guaranteed lifetime withdrawal benefit. It offers predictable growth and guaranteed cash flow for life — even if your account balance falls to zero.3
NOT FDIC/NCUA INSURED | MAY LOSE VALUE | NO BANK/CREDIT UNION GUARANTEE | NOT A DEPOSIT | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
This communication is for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice.
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1 Diversification does not assure a profit or protect against a loss in declining markets.
2 Annuities are long-term investment vehicles designed for retirement purposes. They are not intended to replace emergency funds, to be used as income for day-to-day expenses, or to fund short-term savings goals. Fixed index annuities are not securities and do not participate directly in the stock market or any index and are not investments. It is not possible to invest directly in an index. Withdrawals of taxable amounts are subject to ordinary income tax and if made before age 59½, may be subject to a 10% federal income tax penalty. Distributions of taxable amounts from a nonqualified annuity may also be subject to an additional 3.8% federal tax on net investment income.
3 ParityFlex™ is issued by Gainbridge Life Insurance Company (Zionsville, Indiana). All guarantees are based on the financial strength and claims paying ability of the issuing insurance company. Withdrawals may result in a surrender charge, or a market value adjustment (MVA) and excess withdrawals may result in a reduction of future payments under the guaranteed lifetime withdrawal benefit so long as your balance hasn’t gone to $0 due to excess withdrawals.
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