9 Simple Ways to Avoid Running Out of Money in Retirement

Do you worry about running out of money in retirement? If so, you are certainly not alone.

Many wonder if their nest egg will be big enough to support decades of living without a paycheck. Fortunately, there are things you can do now to shore up your retirement savings.

So, whether you plan to retire early or want to work late into life, consider the following strategies to help you avoid running out of money during retirement.

Many people are not prepared for retirement. Half of Americans have not taken steps to determine how much money they need to save for their golden years, according to the U.S. Department of Labor.

To help discover how much you need and whether you're truly on the right path, consider meeting with a financial advisor to see if you need to build your wealth further.

This type of professional can evaluate your current plan and suggest options for helping you reach important money goals.

How much do you need to save for retirement? Whatever you think the number is, it can be wise to aim to save even more.

Many experts suggest that people will need 70% to 90% of their pre-retirement income to maintain their standard of living in retirement, according to the Department of Labor. However, the right number depends on your specific wants and needs.

So, what type of lifestyle do you want during retirement? If you are unsure — or even if you are not — saving more can provide a cushion that will reduce the risk of running out of money in retirement.

For some people, expenses will drop in retirement. Will you pay off the mortgage before retiring? If so, that will leave more room in your budget.

Will you have adult children living at home, or will everyone have likely moved out? If it's the latter, you might be able to downsize to a smaller home and save money.

Contributing more to your retirement accounts might help increase your odds of building a nest egg that can carry you through retirement.

There are no guarantees, of course, but historically, saving and investing money has paid off for many people.

Also, the more you contribute to employer-sponsored or other tax-deferred accounts, the less you will owe to the IRS, at least in the short term.

Annuities are one tool some people use to avoid running out of money during retirement.

With an annuity, you give up a lump sum of money or make a series of payments in exchange for a monthly payment from an annuity company for the rest of your life.

There are many different varieties of annuities, and this type of product has a lot of pros and cons. So, think carefully before purchasing an annuity.

The longer debt sits around, the more expensive it gets. If you pay off debt quickly — ideally, prior to retirement — it not only saves you money in interest costs but also eventually frees up money in your budget.

If you're struggling to get debt under control, consider working with an expert, such as a nonprofit debt counselor, to craft a debt management strategy. Many times, prioritizing debt elimination means more money in your pocket to put toward retirement.

Medical costs can really damage a budget during retirement, and it's no secret that as people age, their health often declines. So, make sure to prepare for these health care costs well before you stop working.

Although most people have Medicare in retirement, the program does not cover all medical costs. So, it can be helpful to tuck away a fair amount of money for health care needs.

Also, don't forget to plan for the possibility of long-term care. Medicare does not cover the cost of long-term care.

Even if you are decades away from retirement, the sooner you create solid spending habits, the better off you will likely be in the future.

This might include crafting a budget and sticking to it. Budgets shouldn't feel limiting, but rather supportive. An accurate budget helps you track expenses so you can stay on track with financial goals.

And remember, every time you purchase something you don't really need, you have less money to devote to retirement savings.

Many experts recommend creating a diversified portfolio of investments. Although there is no surefire strategy that is always guaranteed to work, diversification often can help reduce some of the risks of investing by limiting your losses.

We've all been told not to "keep your eggs in one basket," and diversification helps prevent your investments from becoming too concentrated in one area.

Remember that you might have to adjust these strategies over time. Once again, a financial advisor can help you boost your retirement bank account.

Reducing costs and increasing savings strategies now might help you minimize the risk of running out of money in retirement.

Developing good financial habits can help boost your bank account so that you build a nest egg that has a better chance of carrying you through your golden years. 

And if you need help, consider meeting with a financial advisor who can help you develop the right plan for saving and investing.