Pop quiz: If you were to retire today, how long could you survive on the money currently in your retirement account? According to 2022 survey data, more than half of all Americans feel behind in their retirement savings. The good news is that with the right planning, even a modest six-figure 401(k) can last the rest of your life. 

Here’s how to make the most of a small nest egg so that you can enjoy your golden years worry-free.

How Much Do I Need for Retirement?

How much do you really need to save for retirement? For many years, Americans set their sights on $1.05 million. But with inflation on the rise, they are revising their estimates, now expecting to need $1.25 million to retire comfortably, according to a Northwestern Mutual survey.

Still, for many Americans, even $100,000 seems like a stretch. That’s especially true if you’ve fallen behind in your retirement savings or if inflationary pressures are making it hard to put money away for the future.

“When most people sit and think about how much money they have saved and what they need for retirement, considering how much prices increase year by year, more often than not, they miss the mark,” says Leonard Kim of AdvisorCheck. “Usually, people tend to factor in what things currently cost and forget to include inflation into their figures, which leaves them oftentimes missing the mark. For example, before the year 2000, you could buy a soda for 25 cents. A few years ago, it was 75 cents. Now, it’s $2.25 to $2.50 for that same can of Coca-Cola,” Leonard continued.

Nevertheless, even a small nest egg can last, but only if you know how to manage your money effectively. And once you retire, you can continue to invest your retirement savings to build wealth even as you make withdrawals.

How to Save More Money for Retirement

Thankfully it’s never too late (or too early) to save money for retirement. If you’re worried about saving enough, you can use the following tips to try to build your savings:

• Start saving for retirement early to take advantage of compound interest
• Take full advantage of your employer’s matching 401(k) contributions
• Open an IRA to augment your retirement savings
• Use automated payments to set aside retirement contributions
• Adjust your budget to have more money to allocate for the future
• Pay off debt to have more money to contribute to savings and retirement
• Make catch-up contributions once you turn 50

It also helps to set a goal for your retirement. This might be a particular dollar amount, though it also might be a particular lifestyle goal. Want to retire poolside? Move closer to family? These sorts of tangible goals may make it easier to discipline yourself to rein in your spending so you can put money aside for the future.

7 Tips for Making a Small Nest Egg Last

Ultimately, the size of your nest egg isn’t always as important as the way you use it. To that end, even a six-figure nest egg can last longer than you realize — provided you take steps to use your money carefully. Here are seven tips that can help you stretch your money further.

1. Create a Budget for Retirement Expenses

Start by creating a budget for your retirement years. Your current monthly expenses may serve as a useful frame of reference, though you may be able to subtract things like a monthly mortgage payment once you reach retirement.

Make sure to distinguish between necessary and discretionary expenses. The bulk of your retirement savings should go to must-have costs such as food, healthcare, housing, and utilities. But you can also allocate a portion of your budget to luxury items, hobbies, or traveling.

Most advisors recommend that you withdraw 4% of your retirement savings each year to cover your expenses, making adjustments for inflation each year. So if you have a six-figure 401(k), you can withdraw $4,000 for every $100,000 you have saved. 

This may not sound like much, but if you can create a budget around this figure, you can make your retirement savings last 30 years.

2. Consider Healthcare and Insurance Costs

By some estimates, older Americans will spend as much as $80,000 on healthcare during the course of their retirement years, with some needing $100,000 or more for specialized care.

You’ll need to account for these costs in your budget. With only a six-figure nest egg, you may also want to consider finding supplemental insurance products to aid with these costs. The right policy can supplement Medicare and assist with the high cost of prescription drugs, office visits, and more.

Now may also be a good time to consider long-term care insurance. These plans can reduce the burden on your family and give you peace of mind if you ever need residential treatment or continual nursing care.

3. Adopt Cost-Saving Measures

The key to stretching your budget is to find ways to reduce your most routine costs. During your retirement years, you want your bills to be as low as possible, so consider negotiating for a better rate.

This is easier than you may think. Try contacting your internet or utility provider and simply asking for a lower rate. Some basic strategies might include:

• Citing the number of years you’ve been a loyal customer
• Citing your record of on-time bill payments
• Noting the rates of their competitors
• Asking for the same rate they offer introductory customers
• Asking for additional services in exchange for your current rate

If you’re not able to secure a better rate, it never hurts to shop around. Another provider may be able to offer a better deal, especially if you’re a new customer.

4. Embrace Frugal Living Habits

Stretching your budget requires you to live within your means. But that doesn’t mean you have to sacrifice your quality of life or abandon your retirement dreams just to save some bucks.

Instead, try to adopt healthy financial habits to make the most of your savings. Some basic strategies might include:

• Limiting the number of meals or drinks you buy from restaurants
• Purchasing store-brand groceries and healthcare products
• Avoiding credit cards with high interest rates
• Rotating your subscription services
• Negotiating utility bills 

Before you retire, it helps to eliminate any outstanding debt you may have, such as your mortgage, car payments, or credit card bills. Paying off debt while you have a regular paycheck can ensure that you eliminate this financial burden and will be able to use your retirement savings to pay for future expenses rather than cover past debts.

5. Maximize Retirement Benefits and Opportunities

There are benefits to getting older! For one thing, you’ll be eligible to receive Social Security income, which can supplement your retirement savings and help you stretch every dollar.

But you can also take advantage of other benefits, such as:

• Discounts for senior citizens at restaurants and other businesses
• Community-based transportation services
• Housing assistance
• Supplemental Nutrition Assistance Program (SNAP)
• Assistance with utility bills

For specific advice, you can learn more by contacting nonprofit organizations such as the National Council on Aging or researching government programs through the U.S. benefits website.

If you’re a veteran of the U.S. military, you may be eligible for additional benefits from the U.S. Department of Veterans Affairs or even from participating restaurants and retailers.

6. Embrace a Balanced Lifestyle

To truly stretch your budget, you’ll need to embrace a balanced lifestyle. This means finding ways to enjoy your retirement years without spending all of your savings. 

Some ways to do this include:

• Finding affordable hobbies and activities
• Focusing on experiences rather than possessions
• Prioritizing family over luxury vacations
• Tracking your spending to stay within your budget

You might also consider downsizing your home before retirement. You’ll have less property to maintain, and you can use the proceeds from the sale of your home as a way to supplement your retirement income.

It also bears repeating that you’d be wise to avoid credit card purchases unless you’re committed to paying off your full balance each month. Otherwise, high interest rates can quickly eat into your monthly budget.

7. Invest and Grow Your Nest Egg

Even after you retire, you still have an opportunity to continue investing and growing your savings. After all, you don’t have to cash in your full six-figure retirement account in one lump sum. You can invest a significant portion of what remains in order to build and maximize your wealth.

But to do this wisely, you’ll need to diversify your investment portfolio. You can achieve diversification within an asset class, such as by investing in stocks from multiple sectors and industries (e.g., tech, healthcare, and finance). 

You can also diversify your portfolio by spreading your investments across several different asset classes, such as stocks, bonds, annuities, and other financial vehicles. 

If you’re not sure of the best way to achieve this, you might consult a professional financial advisor. AdvisorCheck can help with this. Start using the AdvisorCheck search tool today to find advisors in your area who can help you plan for your future.

Get Help from a Professional

Have you ever thought about consulting a financial advisor? These financial professionals can help you plan for your future, providing guidance on your retirement strategy, wealth management, and more. 

To get started, simply use AdvisorCheck’s search tool to find advisors in your area. You can narrow your search by area, then research each advisor to find a professional who’s the right fit for you.

Written by John Boitnott, Motley Fool, Entrepreneur and Due.com contributor

Fact checked by Billy Quirk

Reviewed by KJ Kim

Disclosure

The information provided in this article was written by the research and analysis team at AdvisorCheck.com to help all consumers in their financial journeys, by providing the resources and the insights to help improve one’s financial health, make it through recessionary and inflationary periods of time, and save their earnings to use them towards building a secure financial future. 

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