5 Hacks to Make Your Retirement Savings Last Longer

Your retirement savings should ideally last the rest of your life. Unfortunately, that's not the case for many Americans. A surprising 40.6% of U.S. households with a head of household between 35 and 64 are projected to run out of money in retirement, according to 2019 research by the Employee Benefit Research Institute.

The amount you save for retirement is an important part of avoiding this. But it also helps to know how to make your retirement savings last longer. It could be the difference between running out of money and having a comfortable retirement.

1. Consider downsizing or cutting back on expenses

Retirement is a big transition, and it can also be the perfect time to adjust your spending. Since you don't need to be close to your job anymore, you could move to a smaller home or a more affordable area. Some retirees even move abroad, where their retirement dollars go further and the healthcare is often much cheaper.

If you'd prefer less drastic options, look for expenses you can reduce or cut now that you're retired. Maybe you and your spouse could go from two cars to one. Or you could use your extra time to cook more meals at home and spend less at restaurants.

2. Delay taking Social Security

One of the more important decisions you'll make during retirement is when to start receiving Social Security benefits. You can do so as early as 62, but you'll receive a reduced benefit amount.

To receive the largest benefit amount, you need to wait until full retirement age. That depends on the year you were born. For those born in 1960 or later, full retirement age is 67. Anyone in that group who starts getting Social Security at 62 will receive 30% less.

Waiting until full retirement age has its pros and cons. But if you want to be prepared for a long retirement, it's likely better to wait as long as you can for a larger benefit amount.

3. Plan ahead to minimize taxes

If you have your savings spread across multiple types of accounts, consider the tax implications before making withdrawals. With traditional 401(k)s and individual retirement accounts (IRAs), you'll pay income taxes on your withdrawals. With Roth 401(k)s and Roth IRAs, withdrawals are tax-free.

Let's say you're planning to wait a few years before receiving Social Security, which will raise your taxable income. It makes sense to withdraw from traditional accounts first, while your income will be lower. When your taxable income is higher because of Social Security, then you can tap into your Roth accounts for tax-free funds.

4. Pay for expenses with a rewards card

Rewards credit cards are an easy way to save money -- if you pay them off every month. If you carry a balance, then you'll be charged interest. You have to be careful not to overspend, but if you're just paying your regular bills, it's better to use a card that earns rewards than one that doesn't.

The most popular type of rewards card is cash back credit cards. These are the most straightforward option. If you pay $2,000 in bills per month on a card that earns 2%, you'll earn $40 cash back. That adds up to $480 in savings per year.

5. Keep money invested in the stock market

As people get closer to retirement, they normally shift more of their money from stocks into bonds. The stock market is volatile, sometimes rising or falling by over 20% within a year. Bonds are fixed-income securities, so they're a much more stable investment.

However, you shouldn't abandon stocks entirely, as they offer much greater growth potential. The stock market's average return is about 10% per year over the long run. Bonds normally return about 5% to 6% per year.

A popular investment strategy for retirees is an even split between stocks and bonds. This depends on your risk tolerance and how much money you have saved. If you have plenty of retirement savings and want to prioritize maintaining it, then you may go more bond-heavy. Even if you do, it's still a good idea to continue investing in stocks, too.

There are plenty of smart ways to stretch your retirement savings. By following a few of them, you could save thousands every year and ensure your savings lasts as long as you need.