If you're planning to retire in 2026, you may be one part excited and one part nervous. After all, you'll be giving up the paycheck that's sustained you for years and moving over to a whole different system for covering your expenses.
One common fear among retirees is outliving their savings. And it's an understandable one. If you want to make sure your money lasts in retirement, here are three strategies to use.
Image source: Getty Images.
1. Implement a smart withdrawal rate from the start
It may be that you're planning to retire in 2026 and start withdrawing from your IRA or 401(k) immediately. There's nothing wrong with that -- that's what the money is there for. But it's important to make sure you're being strategic with how much you withdraw.
You may be familiar with the 4% rule in this context. It has you withdrawing 4% of your retirement savings your first post-working year and adjusting future withdrawals for inflation.
A 4% withdrawal rate may or may not be sustainable for you, though. It all depends on how your savings are invested.
If you have 80% of your nest egg in bonds and the other 20% in stocks, then your portfolio may not be able to generate enough annual income to support a 4% withdrawal rate. You need to make sure your asset mix and withdrawal rate match up. A more conservative portfolio should lead to a more conservative rate of withdrawal.
2. Have cash on hand to ride out a market downturn
You never know when stock market conditions might take a turn for the worse. A market downturn early on in retirement can be very detrimental, especially if you don't scale back on retirement plan withdrawals. So one thing you may want to do before the market sours is cash out some investments while their value is high, and then put that cash somewhere safe, like a high-yield savings account or CD.
Even if the market doesn't undergo a correction or worse in 2026, it's generally a good idea to have enough cash on hand in retirement to pay for one to three years of living expenses. That way, you'll be able to ride out a future market downturn.
Plus, it happens to be that CD rates are still pretty strong right now, even on the heels of recent rate cuts by the Federal Reserve. So it could be a good idea to take some of your money and put it into a CD ladder with competitive locked-in rates.
3. Line up more guaranteed income to limit withdrawals
The more guaranteed income you have outside of your IRA or 401(k) plan, the less you might have to tap your savings each year. You can boost your guaranteed income in a couple of ways.
First, you could choose to delay Social Security. For each year you hold off on claiming benefits beyond full retirement age, they get an 8% lift, up until you turn 70. Since Social Security is set up to pay you monthly benefits for life, that takes the pressure off of your nest egg to a large degree.
You can also look at purchasing an annuity at the start of retirement. An annuity is a contract you enter into with an insurance company. In exchange for the money you pay, you're guaranteed payments for a certain period of time. And that period could be for life.
It's important to feel confident that your money will last as long you need it to in retirement. If you're about to bring your career to an end, consider these strategies for preserving your nest egg -- and avoiding the financial stress that comes with worrying about running out of money.
