When it comes time to retire, and you start living on your savings, you have to be smart. That is, if you want your money to last you the rest of your life. You have worked hard, for years, to save money for your retirement. But now it is time to retire. What should you do?

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There are many things to consider as to when you are going to start living on your savings. Depending on your age, health, savings, pension, goals, family circumstances, risk tolerance, and market conditions.

If you ever needed a financial adviser, to make your money lasts as long as you do, it is now. But find one that charges money for advise, and not someone who is going to try and sell you something.

The magic number is 4 percent. You should plan on withdrawing no more than 4 percent of your savings the first year. To keep it simple take a lump some the first year, deposit it in the bank, or money market, and budget it for paying 12 months worth of bills. Withdraw the money every month and pay your bills. This will get you familiar living on a fixed income.

In the following years, give yourself a raise by the percentage of inflation. With this plan your money should last 30 years, provided you invest half in diversified stocks for mutual funds, and half in diversified bonds.

Four percent isn’t a lot of money on a modest savings. For example on $100,000 that’s only $4000.00. That might be enough, if you have a pension and Social Security. If not, then you need to figure that out now. While you’re still working you can focus on retirement “prep”. You can increase your savings, cut your spending, and a must,is reducing debt.

If you are retired and taking more than 4 percent it is time to go on red alert, your money could run out. Aim to reset your budget at the 4 percent next year, and take the inflation increases the year after.

If you have swore never again to the stock market, and have your money in a fixed income, you will have start with less than 4 percent. That probably means you will have to wait to retire, and cut spending or generate more income.

Every 5 years or so run the numbers and check your goals. If you are planning on only 20 years of retirement, you could start at 5 percent with the adjustment for inflation the next year.

In my next article I will go into more detail of the different waysto create a life long income with the traditional 4 percent rule. Subjects to come, total return strategy, the bucket strategy, and income floor strategy.

The best advice I can give is to consider all the fact and seek out as much information as possible. We live in a world where information is abundant by means of the Internet.

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