Key Points

Now that you’ve built your retirement nest egg, how can you make it last? Switching from being a saver to a spender means having an entirely new approach to money. We’ll walk you through nine ways to help maximize your retirement nest egg, plus show you examples of what to do.

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You’ve been building and protecting your retirement nest egg for decades. You’ve been anticipating the day when you could say goodbye to the nine-to-five grind and finally have time for whatever activities or challenges come your way—whether that’s working part-time, volunteering, or traveling, or even starting a new business. Whatever your dreams, this is your time. What surprises you, though, what you hadn’t anticipated, was how tough this transition would be psychologically—and how vulnerable you would feel.

I’ve heard variations of this story so many times that I know it isn’t necessarily a function of one’s wealth. Switching from being a saver to being a spender means having an entirely new approach to your money.

It can be tough regardless of the size of your portfolio. To ease this transition, my colleagues at the Schwab Center for Financial Research have come up with some pretty straightforward guidelines. They aren’t intended to be rigid directives. But our experience has shown us that these fundamentals can help reduce your financial stress and support whatever retirement lifestyle you choose.

Also think about consulting an objective financial planner as you transition into retirement. This is one of those times in your life when some professional guidance can go a long way.

No. 1: Review your situation

No matter how much or how little you’ve saved, make sure you know exactly where you stand. Gather the latest statements from all of your accounts, and create a net worth statement (your assets minus your debts). Then take a look at your cash flow (money in, money out) for the last couple of years, and use this information to create a projection for the future.

Caution: If you want your portfolio to last for 30 years, plan to withdraw no more than 4% of its value in the first year of retirement. After that, you can adjust the amount for inflation.

No. 2: Maintain at least a year of cash

Set aside enough cash to cover at least one year of spending. This is the amount that you’ll need in addition to the income you can count on—for example, from Social Security, a pension, or real estate investments. Following are some good places to keep your cash. None will provide a great return, but that’s okay. This is about safety and liquidity—not income.