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So you’ve turned 66, have finally retired, had a great time at your office farewell party, said your goodbyes and are finally, finally free to fulfill your long awaited dreams. So, being happy should be first on your list, right?

Well, not quite.

Now that you’re not working anymore (and therefore not actively earning anymore), you’re wondering if you can live your life without having to pin a “Welcome to Walmart” tag 10 years later due to having no cash. Sure, you have money now, but how long before it is all finished?

Believe it or not, it is actually possible to make your money last for the rest of your lifetime – despite any and all factors surrounding it. The secret lies in adapting your portfolio to a life where you are not collecting monthly paychecks anymore. Experts say that there is one thing all retirees (and even retirees-to-be) should understand is the fact that no matter how large the nest egg may be, it still needs to be backed by a regular paycheck – one that does not come from working at the office. According to senior economist Anthony Webb, who works at the Boston College Center for Retirement Research, the option to work longer and postpone retirement when the investment markets are down no longer exist once you have retired.

This does not mean, however, that you need to change your portfolio from the inside out – unless you have retired all-of-a-sudden to have exceptionally mishandled your investments. For instance, if your plan is to withdraw 4% of your assets during the first year of your retirement and thereafter adjust the amount according to the inflation rate later on, you will be very likely to deplete your savings over the course of 30 years. What you need to do, therefore, is to review your investments, determine how you can alter your portfolio to balance your requirements, and then use the portfolio to factor-in income, safety, and growth in a way that you will be emotionally as well as physically comfortable.

This brings us to the question – how does one make this determination?

One must start by look at three main factors:

  • All retirement income sources
  • How flexible your budget is; and
  • The ability to withstand risk psychologically as well as practically.

Based on these guidelines, you can adapt your portfolio by using any one of the two most popular strategies of asset-allocation that put safety first. These are:

  • The bucket plan: According to this plan, you make three divisions your savings, each of which will be used in each stage of retirement.
  • The cover-the-basics plan: This plan will have you paying for your fixed expenses with your fixed sources of income (like pensions, annuities and Social Security). Your other assets will take care of the negotiable non-necessities (like entertainment and travel), which can be put on the back burner should the stock market plummet.
    While these two approaches are different, and have their own set of advantages and disadvantages, they start from the same point – to match your regular income sources to your essential, non-negotiable expenses.

Each method has its own set of passionate advocates. Those siding with the bucket emphasize on the fact that designating an amount of cash will help couples identify their needs and budget. According to CPA Doug Duerr, couples should put their designated money in such as certificates of deposit, bank accounts, and money market. While this money will, practically speaking, earn very little, it will clearly demarcate your spending over your 30 years of life as a retiree. In the stocks plummet, the couple can survive on their cash holdings and there will be no need to unload stock funds or stocks at low prices; once the stocks recover, the couple can once again refill their cash bucket and gather money that can easily pay of 2 years worth of bills.

Many, such as Steve Vernon, a leading expert on retirement at the Stanford Center on Longevity, at Stanford University prefer the cover-the-basics plan. He believes that couples should focus on bridging the gap between basic, non-negotiable monthly expenses and non-necessities.

Yet another way to save extra money is to delay your retirement. The more time you spend working actively, the more you will earn (and save) and the lesser amount of time you will have to run with it. Moreover, you get to not claim Social Security till you actually retire, and yet avail the benefits of the same as you did if you had retired on time.

All said and done, this method is not suitable for all. Not everyone wants to keep working till they are 70, and not claiming Social Security does not have much of a practical value when you have to use all of it to pay for your monthly expenses.

Investing Your Nest Egg

As with allocating your money, there are various ways in which you can invest your nest egg. According to several experts, retirees have the ability to devote ample time to take their savings to stocks. This is partly due to the fact that both the bucket and cover-the-basics plan shield retirees from short-term plummeting of the stock market.

Which brings us to the question – how much should you invest and how much should you save? According to Vanguard Group strategist Catherine Gordon, this proportion depends on your age. For instance, if you’re about to – or have just retired at 66, you will benefit most from investing half your assets in stocks and the rest in cash and bonds. Furthermore, portion of the portfolio devoted to stocks should be divided between foreign and domestic stocks. The bonds, too, must U.S. and foreign debt and must be distributed equally among different maturities – without going overboard on long-term bonds.

Yet others, such as financial manager Nick Ventura, advocate a more hands-on approach, suggesting retirees to hold more in stocks and less in bonds. According to him, in the low-interest-rate environment of today, retirees must emphasize on stocks that actually pay dividends, such as real estate investment trusts and paying stocks. Additionally, they should make shield themselves against inflation by keeping some money in commodity funds.

Vernon’s approach is very simple. Based on the logic that retirees have their basic expenses completely covered with the help of pension, annuities and Social Security, they must invest whatever money they have in a traditional balanced fund, which involves keeping two-thirds of the assets in stocks and the rest in bonds.

Needless to say, there is no “one size fits all” formula to making your money last. It is you ho will have to figure out the basics, allocate your resources and wait for the future to unfold. Even in the worst case scenario, you can never be completely wrong.