Don’t jeopardize the stability and continued growth of your nest egg by straying from your retirement-savings plan. Saving enough now and knowing how much to withdraw after you retire will help you secure your finances throughout retirement.

If your financial planning is on track to meet your retirement savings goal, the next step is planning how to make it last as long as you do.
There are two main calculations:

YOUR LIFE EXPECTANCY

Not the most pleasant task, it is, however, essential to estimate how long you might live so that you can make sure your money keeps up with you. It’s wise to seek input from a pro. A professional retirement planner uses a computer model that takes into account numerous factors to estimate of how long your money needs to last.

WITHDRAWING MONEY

Once you estimate your life expectancy, you need to address a more complex set of issues. Here’s what you’ll need to consider:

Withdrawal Rates
The standard advice is that you should plan to live on about 4 percent of your savings. Theoretically, this conservative model ensures that you have enough money, even if the market stunts your investments or you are hit with major expenses or runaway inflation.
Some advisors allow for a much higher withdrawal rate, say 9 percent -- especially if you don't plan to leave a legacy to your heirs, or if your nest egg is likely to be small and you will need to live on principal, not just interest.

What You Will Need When
A flat withdrawal rate has its advantages. By taking out the same amount each month or quarter, your nest egg is likely to remain stable and continue to grow.

But some advisors think retirees should consider withdrawing varying amounts as their needs change. A younger retiree might need less money if he is still working part-time; an older retiree might require more money for insurance and health-related expenses.

The Cost of Inflation
Let's say you plan to live on about $80,000 a year in retirement. If inflation is about 3 percent, after five years that amount would only buy about $68,000 worth of goods. In order to maintain your lifestyle, make sure your calculations include inflation.

Your Asset Allocation
How you and your advisor decide to balance your investments determine how well your savings weather inflation and maintain a steady growth rate.

Tax Implications
Don’t forget to factor in the costs of any applicable taxes. If your investments are in a standard trading account or in a traditional IRA, any gains your money earns will be subject to taxes when you withdraw it. Roth IRAs have different rules. To get to know them go to Rothira.com for more information.

BOTTOM LINE

Left alone, your retirement stash may grow. By tackling a few tricky issues in advance, ideally with a pro, your nest egg is more likely to withstand market fluctuations and inflation and last as long as you do—or even longer.