GOING IN STYLE

You don’t have to rob a bank to fund your retirement. Financial expert Sharon Epperson shares three ways to make your money last.

T he idea of robbing a bank so you can live it up in retirement makes a great plotline for a Hollywood movie, but when it comes to real life, we all know stealing your nest egg is not the prudent way to make sure your money lasts as long as you do. Instead of staging a holdup, take time now to make sure your finances are on track for when you’re in your 60s, 70s, 80s and beyond.

1. Plan for longevity

People are living longer, and that means your money will have to last longer than you might expect—even two or three decades. In fact, someone who is 65 years old can expect to live another 19 years, according to the National Center for Health Statistics. Since retirement today doesn’t automatically mean you’ll stop working completely and live off a pension, you’ll need to ask yourself these important questions to prepare:

Do I expect to keep working?

Many people in their late 50s and early 60s are already planning to hold on to jobs longer, while others are pursuing “second acts.” If you’re financially stable, you may be able to pursue fields and attain positions that fulfill your passions as well as your pocketbook.

Where do I want to live?

Contrary to popular belief, the majority of baby boomers in their 50s and 60s are not planning to downsize and head for a condo in Florida or Arizona. Nearly two-thirds have no plans to move at all, according to a recent survey. Many boomers will “age in place” in homes and communities where they’ve lived for years. Those who move don’t plan to go too far so they can stay close to their families. Boomers who are still looking for their “dream home” are the exception. In that case, housing costs might actually increase in retirement.

Will my cost of living change?

Get a handle—even a rough estimate—on how much your monthly expenses will be in retirement. Include essentials that are in your current budget but also consider expenses that could grow exponentially, like health care. If you have a job that offers health benefits, you probably haven’t spent much time thinking about the total cost of your medical, dental and vision expenses. Medicare won’t cover everything. In 2016, Fidelity estimated that a couple, both age 65 and retiring that year, could expect to spend about $260,000 on health care throughout retirement. Go to Parade.com/retire to do some calculating of your own.

2. Calculate your magic number

Everyone talks about that “magic number” you need to save for retirement. But how much is it?

Your monthly Social Security check probably won’t be enough to cover all of your retirement expenses. To maintain your current lifestyle, you’ll need about 70 percent of preretirement income on

Start saving at 20: save 10% of annual pay to retire at 65 Start saving at 35: save 15% of annual pay to retire at 65 Start saving at 45: save 27% of annual pay to retire at 65

average, according to Boston College’s Center for Retirement Research. About 36 percent of that will come from Social Security, but you’ll need to come up with the other 34 percent.

To make up that percentage, plan to set aside about 15 percent of your pay over the course of 30 years to retire comfortably. Or use the following cheat sheet:

Put your savings strategy on autopilot, if you can. Have retirement contributions deducted automatically from your paycheck. Save as much as possible in employer-sponsored retirement accounts— 401(k) and 403(b) plans. You can save up to $18,000 in a 401(k) in 2017 and up to $24,000 with “catch-up contributions,” if you are 50 or older. Maxing out on regular or Roth IRAs will add another $5,500 to your nest egg in 2017—and you can stash away $6,500 if you’re 50 or older. Money you put in a 401(k) reduces your taxable income dollar-fordollar. Regular IRA contributions may be tax-deductible, if you qualify. And though you’ll make after-tax contributions to a Roth IRA, withdrawals are generally taxfree after you turn 59½ if you’ve held the account for at least five years.

Need to save more? Stash cash in a savings account or a brokerage account, where you can purchase investments such as stocks, bonds or mutual funds. You also can have these deposits made directly from your paycheck or have a specific sum transferred every month.

3. invest smart

Plot a course for your investments that allows your money to grow even as you get close to retirement. Most financial advisers agree it’s best to focus more on the long-term growth of your retirement assets rather than the gains or losses you make in any one year. To achieve that growth, you may have to take a bit more risk.

Many baby boomers and retirees have planned to invest heavily in bonds for a steady source of income, using the stream of interest payments that they provide to cover everyday living expenses. But a more well-diversified portfolio may be needed. Add dividend-paying stocks, which can provide a little extra cash, and real estate or commodities, such as gold or currencies, to the mix.

Investing comes with risk. Some financial advisers suggest annuities as a way to get a steady stream of income during retirement. An annuity is a contract between you and an insurance company that requires the company to make payments to you either right away or in the future. Just make sure you understand the terms and conditions of an annuity contract before entering into one, because they can be complicated. There may even be an annuity option in your 401(k). Employers may offer deferred-income annuities in target-date funds used as default investments, which means you’re automatically enrolled in this option unless you change it, in the retirement plans they sponsor. A target-date fund invests more conservatively over the years as you get closer to your retirement date. This less risky approach is meant to protect your money should the stock market suddenly sell off. However, it also means you might not make as much money during big rallies. Target-date funds can be invested in stock and bond funds as well as annuities that begin payments at retirement or at a later time, offering another way to generate guaranteed income and help protect your savings later in life.