You’ll likely spend decades saving for retirement, and once you leave the workforce, you’ll need to make sure your nest egg lasts for potentially several more decades.

Here are three ways to stretch your savings.

Plug Money Leaks

Some costs will decrease in retirement, such as commuting to work or contributing to a retirement account.

But examine other routine expenses that can be costly and no longer necessary.

For example, you may have purchased life insurance years ago when you started a family to replace your income if something happened to you. But if the kids are now adults and your spouse doesn’t need insurance proceeds to finance their retirement, consider options such as converting any cash value to an annuity, reducing coverage, or selling or cancelling your policy.

Reevaluate your housing, which is usually a retiree’s biggest expense. If your home is too large for your needs, consider downsizing to a smaller place in your community or moving to another state with a lower cost of living and a more favorable income tax rate.²

And if you were a two-car family when you and your spouse were working, you might switch to one vehicle in retirement, reducing auto maintenance and insurance costs.

Manage Withdrawals and RMDs Wisely

Which retirement account should retirees tap first? The standard advice is to draw from taxable accounts first, then tax-deferred traditional IRAs and workplace 457(b), 403(b), and 401(k) accounts, and finally tax-free Roth IRAs. This gives tax-deferred accounts and Roth IRAs² more time to grow.

But this strategy doesn’t work for all. For instance, once you reach age 73, you must start taking required minimum distributions annually from traditional IRAs and retirement plans and pay income taxes on that money. RMDs can push retirees with sizable accounts into a higher tax bracket, increase the taxable portion of their Social Security benefits, or trigger higher Medicare premiums.

For these retirees, it may be better to withdraw some money from tax-deferred accounts earlier in retirement to lower future RMDs. Or, they might gradually convert some traditional IRA money into a Roth IRA, which doesn’t have RMDs.

Another option for philanthropic retirees ages 70 1/2 or older is a qualified charitable distribution. A QCD allows you to donate up to $111,000 in 2026 directly from a traditional IRA to a charity. The distribution isn’t taxed and can satisfy all or some of your RMDs for the year.

Taxes are complicated, so working with a tax adviser can help you determine the best path for minimizing taxes on withdrawals at different stages in retirement.

Consider a Retirement Annuity

If you worry about running out of money in retirement, an annuity could be the answer. Annuities are a contract between you and an insurance company. With the simplest annuity, you turn a chunk of your savings over to the insurer, which will then pay you a guaranteed income for life, similar to a pension.

As an example, say your basic living expenses in retirement are covered by Social Security and an annuity. You may be able to invest the remainder of your savings with less worry about a market downturn, knowing you have income coming in each month for essentials.

The drawbacks: Annuities tie up your money. Some are very complex, charge high fees, and assess steep penalties if you want to exit the annuity early.

Also note: If you have a pension along with Social Security, you may not need an annuity.

Disclosures

* A fee of up to $175 may be assessed for participants with account balances less than $100,000.

¹ MissionSquare does not offer specific tax, insurance, or legal advice. The information presented here is for educational purposes only and is not to be construed or relied upon as investment advice. It is recommended that individuals consult with their personal finance advisor prior to implementing any financial or tax strategy.

² Contributions: If you contribute to a Roth IRA, you can make tax-free withdrawals if you’ve owned a Roth IRA for at least five years (as defined by the IRS) and meet the requirements for a "qualifying event": Age 59 1/2, a “first-time” home purchase, a disability, or death (with withdrawals going to your beneficiaries). Otherwise, you may have to pay income taxes and penalties to withdraw your earnings. Withdrawals: Roth IRA contributions can be withdrawn at any time without taxes or penalties. If you have a traditional IRA, you may not be able to withdraw your money before age 59 1/2 without paying a penalty. There can be many exceptions to the IRS rules, so carefully research all of your options.

Financial Planning for Retirees

Log in to your account to meet with a MissionSquare CFP® professional.*