How To Withdraw Retirement Savings, So That They Last Longer?

Making an appropriate withdrawal plan is as important as making a savings plan for your retirement. Unplanned withdrawal from your retirement savings can put you at risk of exhausting it in the middle of your remaining retirement life. So, here are some important points that can help you withdraw your retirement savings so that they last longer and prove sufficient for your old age.

Protect Your Retirement Corpus From Inflation Before You Withdraw From It

Make sure that your retirement corpus is protected from the inflation risk before you start withdrawing from it. The value of your idle retirement corpus keeps eroding due to inflation and along with it if you start withdrawing money from your corpus then you may exhaust it sooner than planned. So, you should park your retirement corpus in instruments that can generate a higher return compared to the prevailing inflation rate so that your corpus can last longer.

Using A Bucket Strategy Can Be Helpful

Divide your retirement corpus into different segments called ‘buckets’ in sync with your financial requirements at different stages in your retirement life. You can create such buckets for short, medium and long-term if you find it difficult to sync with specific financial goals. Such buckets will help you avoid unnecessary expenses and define your financial goals clearly. Thus, you’ll be able to use your retirement corpus linked to buckets and with greater financial discipline your retirement corpus will last longer.

Consider A Systematic Withdrawal Plan (SWP)

Your retirement corpus should keep growing simultaneously when you withdraw money from it. How to do it? You can create a systematic withdrawal plan (SWP) to generate the required liquidity and at the same time allow your remaining corpus to get the return on investment. For example, you can invest your retirement corpus in an appropriate debt fund and start a SWP on it.

To ensure that your retirement corpus lasts longer, it is important to assess your financial requirements at regular intervals after your retirement. If required, you can make the necessary adjustments such as cutting expenses, readjusting financial goals or selling assets that are not needed anymore, to create greater liquidity and enhance financial strength in your retirement.

The author is an independent financial journalist

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)