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3 Easy Moves to Make Your Money Last Your Lifetime

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Spend some time thinking about how you can make it very likely that you won't run out of dollars before you run out of breath.

Be sure to have a plan to make your money last for your lifetime. Image source: Miran Rijavec, Flickr.

Saving for retirement was easier in yesteryear, when many workers had pensions to look forward to -- and lived shorter lives, too, requiring less in the way of retirement savings. Here in 2016, though, relatively few people have pensions, and life spans have lengthened. So, how can you make your money last through your entire lifetime? Here are three suggestions.

Brian Feroldi: The best way to ensure your nest egg lasts for as long as possible is to cut down on your monthly expenses. One of the biggest costs we all face is keeping a roof over our heads. If you're able to reduce what you spend on housing, it will be far easier for your money to last a long time. That's why I'm a big believer in paying off your mortgage early -- especially before you reach retirement age.

Sadly, a recent report from the Consumer Financial Protection Bureau shows that an increasing number of seniors are choosing to retire while they still carry debt on their house. In 2014, an estimated 30% of retirees were still paying off a mortgage, up from 22% in 2001. Retirees in this situation can have trouble continuing to make their payments when their income drops, as it typically does in retirement.

So, what are some easy ways to ensure this doesn't happen to you? Well, you might trick yourself into paying off your mortgage, such as by making a half mortgage payment every two weeks instead of once a month. This will have the effect of adding one extra monthly payment per year. Another option is to refinance your mortgage to a 15-year (or shorter) term if you currently have a longer payment schedule than that. Finally, one relatively painless method is to simply throw all future raises, bonus checks, and windfalls at the mortgage.

Employing any of these methods will not only save you thousands of dollars in interest over the life of the loan, but it will also likely make your future monthly payments lower.

Spending less is a great strategy. Image source: Pixabay.

Dan Caplinger: One thing you can do to help your money last as long as you do is to take a portion of your retirement nest egg and use it to buy an immediate annuity. An immediate annuity takes the lump sum you invest up front and converts it into a stream of monthly payments, giving you several options on how long those payments last. A simple immediate annuity will make monthly payments for the rest of your life, but other options exist that can pay out as long as either you or your spouse are living. Many annuities provide for payments to stop at death, but some optional provisions can let heirs receive either a final death benefit or continuing payments for a set period even after your death.

Converting all of your money to an immediate annuity is risky, because once you've bought an immediate annuity, you typically can't get access to your initial lump-sum investment. Holding some of your nest egg back has the advantage of giving you access to a good-sized pool of cash if you need it for unexpected expenses. That said, applying part of your money toward an annuity can help make your retirement income more predictable and protect it from the challenges that can occur if you live well into your retirement years.

Working longer can keep more money in your coffers. Image source: FolsomNatural, Flickr.

Selena Maranjian: One great strategy to make your money last longer may not be very appealing, but it's quite powerful: Work longer. If you were planning to retire at 62 or 65, for example, consider hanging in there for a few more years. You can benefit in several ways.

For starters, you can keep saving and investing money for retirement. You'll be putting off having to start drawing from your nest egg, making it bigger instead. Consider, for example, that if you sock away $8,000 per year for 20 years, and it grows by an annual average of 8%, you'll end up with about $395,000. If you can keep going for another three years, still averaging 8%, you'll end up with $526,000! That's more than $130,000 extra just by delaying for a few more years. If you're collecting matching funds in your 401(k) from your employer, you'll collect a few more years' worth of that free money, too.

Then there's healthcare. The longer you work at a job that offers health insurance, the longer you put off having to shoulder more of your healthcare expenses. Delay retiring until age 65, and Medicare will kick in. Delaying retiring can also be beneficial with Social Security, because the later you start collecting it, until age 70, the bigger your ultimate checks will be.

This strategy is powerful, but not perfect, because sometimes, health setbacks, job losses, or other unexpected developments can have us retiring earlier than we want to. If working longer is your Plan A, develop a Plan B, too.

Other strategies exist to help your money last longer. Be sure to spend some time thinking about how you can make it very likely that you won't run out of dollars before you run out of breath -- don't just leave everything to chance and Social Security.

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