How to Use Retirement Funds
Using retirement funds wisely will prevent a retiree from running out of money. The retiree’s monthly expenses and retirement income sources will play a large part in determining how to use retirement savings. Working with a financial planner can help the retiree decide the best way to use retirement money.
- Review your living expenses and retirement income to decide how to use the retirement funds you saved. Subtract your expenses from your income sources such as social security or a pension from your employer. Include any dividend and interest that you receive each year in your income as well.
- Find out if you have a surplus each month or if you need to start cashing in some of your retirement funds to help meet expenses. If you have a surplus, you may not need to cash in any of your funds until the government requires you to. Continue to live off of dividends or interest that accrues on your investments instead of cashing them out.
- Go over your current portfolio allocation. Since you are now retired you may want to move some of your riskier investments into safer instruments such as government bonds. Use a free online portfolio allocation tool to determine the best way to distribute your funds for your age.
- Use your retirement funds to pay for a large purchase. For example, if you need to buy a new car, you can use the annual amount the government requires you to cash in to pay for the vehicle. Make sure that you do not need the money for other living expenses or you may want to finance the purchase.
- Contact a financial planner to help you determine how to use your savings. Go over your income and expenses with the planner. Decide the best way to protect your savings so you do not run out of money.