“How do I make my savings last?”
It’s a question I hear all the time from retirees who worry that their pension isn’t stretching as far as they’d hoped. Recently I sat with a client who shared this exact feeling. After transitioning to part-time work, his income dropped significantly. Even though he had a 7-figure investment portfolio, he was reluctant to tap into his savings. His goal was clear: boost retirement income without jeopardizing long-term security.
When Interest Falls Short
Many retirees want to preserve their principal and aim only to spend interest from their savings. While this may seem like a “safe” strategy, it often backfires. This is because interest rates fluctuate, and dividends are never guaranteed. When the interest rates fall, your income can shrink, making it hard to maintain the lifestyle you want.
This was exactly my client’s dilemma. His reliance on interest alone left him vulnerable to low returns, forcing lifestyle compromises. On top of that, limiting investments to interest-bearing assets means missing out on potential growth of stocks. In other words, his money wasn’t working as hard as it could.
A Wise Withdrawal Strategy
Retirees often view the principal of their savings as untouchable, preserving it for future needs or to leave as an inheritance. However, being overly cautious can be counterproductive. I advised my client to shift toward a total return strategy—focusing on the combined performance of interest, dividends, and capital appreciation. With a balanced portfolio, he could draw a fixed monthly amount that covered his expenses while still giving his investments room to grow. This plan provided peace of mind, knowing he could sustain his lifestyle without fear of outliving his savings.
Mitigate Inflation
We addressed the hidden danger of inflation, which erodes the value of fixed-income over time. A balanced portfolio, including assets like equities, offers protection by keeping pace with inflation.
Prioritizing retirement goals is essential: Is maintaining your lifestyle most important? Leaving a legacy? With a flexible investment strategy focused on growth and income, my client saw that he could achieve both.
You don’t have to navigate the complexities of withdrawing money from your savings on your own. For personalized guidance, schedule a Cross-Border Financial Evaluation by clicking here. Let’s determine how you can enjoy a secure and comfortable retirement.
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional in both the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published February 5, 2025.