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GOBankingRates’ editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services – our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines<\/a> and our products and services review methodology<\/a>.<\/p>\n 20 Years Trusted by Though the common sentiment is that your youth is the best time of your life (which, if you had a typical high school experience, you know isn\u2019t true), for many people, there\u2019s a reason why they call retirement the \u201cgolden years.\u201d You don\u2019t have to clock into the office. You get those sweet senior discounts<\/a>. You\u2019ve got life wisdom. And if you\u2019ve planned wisely, you\u2019ve also built a solid retirement nest egg<\/a>.<\/p>\n However, as economic circumstances shift around the world, retirees are starting to rethink some of the more traditional approaches to retirement savings<\/a>. An amount of money that might have outlasted their parents\u2019 or grandparents\u2019 lifespans could run out for today\u2019s retirees within 20 years.\u00a0<\/p>\n<\/p>\n To ensure their savings last, many savvy retirees are switching up the standard retirement game plan, recognizing that retirement planning today requires more adaptability than in previous generations.<\/p>\n They\u2019re Worried About Outliving Their Savings<\/p>\n Generally speaking, people living longer is a good thing. However, greater longevity means retirees need larger savings to last through the rest of their lives. The World Economic Forum<\/a> warns that as people live longer, retirees could outlive their savings by anywhere from eight to 20 years. The risk is real, even for healthy individuals, but it\u2019s even more concerning for retirees who may face chronic health conditions and rising healthcare costs<\/a>.<\/p>\n Recognizing this anxiety among retirees, especially people who are likely to live a longer-than-average lifespan, Morningstar conducted a 2024 study on the state of retirement income to offer updated savings recommendations. Their core advice hinges on retirees relying on multiple income streams<\/a> and carefully timing withdrawals.\u00a0<\/p>\n \u201cRetirees seeking the highest level of lifetime income should consider a combination of delayed Social Security filing and a flexible withdrawal strategy<\/a> such as the guardrails approach, according to our latest research,\u201d Morningstar researchers wrote. \u201cWhile cash flows from the guardrails strategy look volatile on a stand-alone basis, the addition of Social Security income adds valuable stability.\u201d<\/p>\n They\u2019re Realizing They Can\u2019t \u2018Set It and Forget It\u2019<\/p>\n When it comes to retirement savings, one outdated strategy that Gregg Cummings, AIF\u00ae, CRPS\u00ae, CPFA\u00ae, founder and CEO of Gregg Cummings Financial<\/a>, is glad to see retirees reassess is the rigid \u201cset it and forget it\u201d approach. This strategy entails withdrawing the same amount or percentage annually, without taking a clear look at their evolving needs or what\u2019s happening in the market.<\/p>\n<\/p>\n \u201cMore retirees are rethinking their \u2018set it and forget it\u2019 approach, and that\u2019s a good thing. Longevity risk<\/a> is real, and today\u2019s retirement demands more flexibility than ever,\u201d he said. \u201cI encourage clients to use dynamic withdrawal strategies instead of sticking to fixed amounts or percentages. Retirees need to adjust based on market conditions and personal needs, not just pulling 4% every year no matter what.\u201d<\/p>\n<\/p>\n They Know They\u2019ll Need To Diversify Income Sources<\/p>\n While many retirees have traditionally relied on bedrock retirement accounts like 401(k)s<\/a>, IRAs and Social Security<\/a>, some financial experts are concerned that these sources alone may not provide enough for a comfortable retirement \u2014 especially if they could be dealing with care needs down the line. To bridge the gap, retirees are exploring additional income streams, including part-time work, real estate investing and annuities.\u00a0<\/p>\n The Morningstar report highlights annuities as a stable and consistent option for adding steady income without being subject to market volatility. Their advice for when to withdraw funds from that annuity? Wait as long as you can.\u00a0<\/p>\n \u201cIn addition to considering delayed Social Security income, an allocation to a simple immediate or deferred annuity<\/a> can also help enlarge in-retirement cash flows,\u201d the researchers wrote. \u201cBut as with spending higher amounts from a portfolio to enable delayed Social Security filing, the allocation to the annuity early in retirement reduces the money in the portfolio that can compound over the retiree\u2019s drawdown period.\u201d\u00a0\u00a0<\/p>\n Part of enjoying a long and pleasurable life involves being willing to adapt as your needs evolve \u2014 and embracing a more flexible approach to your retirement savings can be a great place to start.<\/p>\n<\/p>\n![\"\"](\"https:\/\/cdn.gobankingrates.com\/wp-content\/uploads\/2023\/11\/icon-20.svg?webp=1&quality=75\"){kind=icon}
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