I've Saved $1 Million for Retirement. How Do I Make Sure It Doesn't Run Out?

Many people struggle to save money for retirement, period. A 2022 report by the Census Bureau found that 49% of adults aged 55 to 66 had no funds stashed away for retirement as of 2017. And given the financial events that have transpired since -- a pandemic-fueled economic crisis and an extended period of rampant inflation -- it's fair to assume that a good number of older Americans who were savings-less a few years ago aren't in much better shape now.

But what if you're in the opposite boat? What if you're nearing retirement with a $1 million IRA or 401(k) balance?

First, give yourself a pat on the back, because reaching that point no doubt meant making your share of sacrifices and investing via a brokerage account shrewdly through the years. But now that you're sitting on $1 million for retirement, you want to make sure that money lasts.

It's true that the more savings you have, the greater your chances of not depleting your nest egg in your lifetime. But the risk of running out of funds technically exists even if you have $12 million to your name. So if you don't want to stress about your savings running out, here are a couple of key strategies to employ.

1. Establish a safe withdrawal rate

When you have a paycheck coming in from a job, you can basically discipline yourself to not spend beyond that paycheck. It's not as easy to do that with a $1 million nest egg, because instead of having a certain sum being paid to you every month, you're looking at a large sum that you can technically withdraw from any way you please.

Now clearly, you're not going to go out and withdraw $500,000 of that in your first year of retirement. That wouldn't be prudent. But it's hard to know how much money to withdraw.

As such, one thing you may want to do early on in retirement is meet with a financial advisor and have them help you establish a safe withdrawal rate that's likely to allow your savings to last. That rate should be based on not just your IRA or 401(k) balance, but your expenses, life expectancy, and investment mix.

As a starting point, it may help you to know that financial experts have long recommended a 4% withdrawal rate. But together with an advisor, you may come to the conclusion that a different rate is more suitable for you. From there, though, sticking to that rate gives you a better chance of not depleting your savings.

2. Generate additional income

Many people associate retirement with not working at all. But while you may be retired from your 9-to-5 job, that doesn't mean you can't work in some capacity.

You may decide that finding gig work is a good way to not only generate some extra income for yourself, but also, keep busy. Or, if you start to miss your former career, you may decide to pursue a less stressful version of it.

For example, if you're a former elementary school teacher, you may no longer have the desire to be in the classroom all day, every day. But you may find that substitute teaching a few times a month is not only enjoyable, but a good way to pad your income. And the more you're able to earn, the less you have to take out of your savings.

Going into retirement with $1 million is a great situation to be in. And with a few savvy moves, you can do your part to help make that money last as long as you need it to.