The average 60-something has just $112,500 in retirement savings, according to data from Northwestern Mutual. But ideally, you'll kick off your retirement with a much larger nest egg than that.
In fact, you may be looking at starting retirement with a nest egg worth several million dollars. But if you're nervous about spending that money, you're not alone.
Many seniors worry about outliving their savings. And as such, many are hesitant to tap their nest eggs even though the purpose of having that money is to pay for different expenses during retirement.
Image source: Getty Images.
If you're scared to spend your retirement savings, you may be denying yourself certain activities or comforts that you deserve to enjoy at this stage of life. So rather than tell yourself that your 401(k) or IRA is off limits, come up with a plan to stretch that money while enjoying it at the same time.
It's all about the right withdrawal rate
Randomly taking withdrawals from a retirement plan could put you at risk of depleting it down the line. But if you take the time to establish a safe withdrawal rate and stick to it, you may be less likely to eventually run out of money.
To be clear, there's no single withdrawal rate that will absolutely guarantee that your savings will last as long as you need them to in retirement. But if you take the time to work through your options, you might land on a number that gives you enough peace of mind to tap your savings without stress.
Don't just assume that you have to come up with that withdrawal rate alone, though. A good idea is to sit down with a financial advisor, review your savings balance, investments, and expenses, and identify an annual withdrawal rate that's suitable for you based on those factors.
Of course, you could start with the 4% rule as a benchmark of sorts. But definitely look at other percentages, as a different withdrawal rate may be more appropriate for you. You may, for example, determine that withdrawing 3% of your nest egg annually gives you access to the income you need but also doesn't cause you to lose sleep over prematurely depleting your savings.
You deserve to spend the money you worked hard to save
Building up a retirement nest egg isn't easy, as evidenced by the fact that so many people enter their senior years without much or any savings at all. If you're sitting on a nice chunk of money, don't go spending it all in one year. But also, don't deny yourself the income you need to stay busy and enjoy life, because you deserve to use the savings you've built.
It's natural to be worried about running out of money in retirement, and to try to leave your nest egg untapped as long as possible because of that. But if you establish a safe withdrawal rate, you can enjoy your money while minimizing your risk of eventually not having savings to fall back on at all.
