Turn your savings into paychecks in retirement
Long version
Margaret had saved diligently for decades. Every paycheck, a portion went toward her retirement account. Then, the day finally came: she retired. Suddenly, the hardest part wasn’t the saving. It was learning to spend.
If that sounds familiar, you’re not alone. Many retirees find the shift from building savings to living off them emotionally difficult, even when they’ve planned carefully. Here are five smart strategies that can help you feel more confident about what’s ahead.
Give yourself permission to spend conservatively. Your retirement plan likely assumes a certain annual spending amount, with increases each year to account for inflation. All else being equal, the lower those initial withdrawals, the longer your money will last. A financial advisor can help you set up portfolio withdrawals personalized to your goals and situation. Feel free to give yourself permission to spend those amounts, knowing there's intention behind them.
For many retirees, the challenge isn’t math — it’s mindset. After years of being rewarded for saving, spending can feel like doing something wrong. It can help to reframe withdrawals as a paycheck you’ve already earned. For example, using your monthly distribution to cover travel, hobbies or time with family isn’t indulgent; it’s the purpose of the plan you built. Connecting spending to your values can make it feel more natural and sustainable.
Do be sure to to review your spending regularly and don’t forget to set aside funds for annual expenses like taxes and insurance.
Keep some cash on hand. A general rule of thumb for retirees is to keep about 12 months’ worth of withdrawals in a separate account for spending and another three to five years’ worth in short-term, fixed-income investments. This cushion can allow your stock investments time to recover from a market downturn, reducing the need to sell investments when markets are down. That said, holding too much cash carries its own risk, as your portfolio may not grow fast enough to keep pace with inflation. So, while some cash is good, you'll also want to remain invested in assets with more growth potential to help your portfolio last through retirement.
Review regularly. Retirement can last 25 years or more, and even the best-laid plans need updating along the way. Review your financial strategy at least once a year or after any major life change.
Stay flexible. Even small adjustments to your spending can have a big impact on how long your money lasts. Retirees who hold off on spending increases in years when their portfolio declines are often able to stretch their savings further than those who increase withdrawals each year for inflation regardless of market performance.
Making the switch from saving to spending takes both careful planning and a genuine shift in mindset. A financial advisor can help you build out an effective approach to switch from saving to spending, and work with you so you can fully enjoy the retirement you worked so hard to reach.
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This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC
Number of words: 488
Short version (radio/print/online)
Retirement changes everything — especially how you feel about your money. After years of saving, spending can feel uncomfortable. But a clear strategy helps you move forward with confidence.
Start with a conservative budget and give yourself permission to spend those amounts.
Next, consider adding guaranteed income, like an annuity, to create steady cash flow.
A cash cushion helps you avoid selling in down markets, so try to keep about a year of withdrawals in a cash account and three to five years' of withdrawals in short-term investments.
Review your plan at least annually and adjust after major life changes.
And stay flexible — adjusting spending when markets decline can help your retirement strategy endure.
With a thoughtful approach, you can help make your savings last and enjoy the retirement you’ve earned. A financial advisor can help you build a strategy tailored to your goals and your lifestyle.
This content was provided by Edward Jones for use by (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone#). Edward Jones, Member SIPC
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*Annuities are long-term investments designed to provide income during retirement. Guarantees are subject to the claims-paying ability of the issuing life insurance company.
Number of words: 146 (excluding FA’s name, address/phone number)