NEW YORK (MONEY Magazine) -
The big day is finally here! Now you want to concentrate on making your hard-earned pile of cash last the rest of your life.
Goal: Make your money last
As you shift from saving to spending retirement money, your main task is to make sure your savings don't run out too soon. Safety is more important than ever, but your portfolio still needs to earn a decent return to battle inflation.
Challenge: Beat inflation
Over the course of a retirement that can last decades, even modest inflation can hurt badly. A fixed retirement income of $50,000 would fall to only $37,200 in purchasing power after 10 years of 3 percent inflation -- and to just $27,700 after 20 years.
Strategy: Monitor spending
To increase the odds that your assets will last the rest of your life, you must first hold annual withdrawals to 4 to 5 percent of your portfolio, especially early in retirement; second, resist the urge to load up on bonds.
In your sixties, you should keep 55 percent or so of your assets in stocks and scale back to about 30 percent in your eighties. Since 1950, a 55 percent stock to 45 percent bond mix would have earned 10 percent a year.
Smart move: Periodically revisit your withdrawal rate
The amount you can safely withdraw may change as you age and your savings grow or shrink. To re-assess your withdrawal rate, go to the Retirement Income Calculator at www.trowe.com.