Not to live longer than your money does just another way of saying that they have no idea.
Know What You Are Going to Get
If you spent several decades working for a company in Quebec and now retirement is on the horizon, it is right for you to be as informed as possible about what you should expect from your 401(k).
Your 401(k) is like an insurance policy that helps you have money when you retire. In the same way that you would want to know if your homeowners insurance in Quebec would cover you in case of fire, you should want to know if your 401(k) will protect you, come what may, over the next few years.
Plans vary drastically, one from the other. Some 401(k) plans only allow lump-sum disbursements. Others might let you make partial withdrawals, but you can make a set number of withdrawals in a year. If you need more access to your money, think about rolling your 401(k) over into a savings account or to an IRA, as this may give you more flexibility. Once you know what you will get and how it will be distributed, you can start thinking about the next steps.
Determine the Best Income Strategy
Now is the time to focus on your retirement income. To do this, ask yourself what your monthly expenses will be, what your monthly income will be, and what percentage of that income you will want to go toward your savings. Your retirement income should exceed what you spend.
You may decide that tapping into your 401(k) as soon as possible is a good idea if it allows you to delay your Social Security benefits. The longer you can delay getting Social Security, the more your benefits increase. If you can work your finances to delay getting benefits until you reach 70 years of age, you will have the highest possible payout.
Social Security benefits are the premium retirement income because they have been indexed to fight inflation. This is a reliable and non-volatile form of income.
Be on the Lookout for Better Investment Options
An IRA will offer a broader selection of investments than what you get from a 401(k). It might be advisable to roll a 401(k) into an IRA after consulting a financial advisor. A 401(k) makes it challenging to create a diversified portfolio where your funds are correctly allocated.
A 401(k) may have a handful of funds, but an IRA opens up thousands of investment options and a wide gamut of mutual funds, ETFs, and individual securities. If you opt to roll your money over into an IRA, you want to make sure that you are getting the return rate needed to not live longer than your money does.
Consolidate Retirement Accounts
While you were working, you may have been saving away money in a few accounts. If you have several IRAs and multiple 401(k) accounts, it is difficult to track everything. It could be beneficial to merge your retirement accounts by rolling your savings into one IRA. It will make keeping track of your money a lot easier. If you have decided to take on another job after retirement, you may move your money to your new employer’s 401(k) plan.
Planning for retirement is a smart thing to do. It allows you to set yourself up to enjoy a calm and peaceful third phase of life. However, planning should not stop when you retire. If you plan for how you will use your money after retirement, you may improve the chances that your money will outlive you.