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(Maury Beckman)

In retirement, you may have several different sources of income, including a monthly benefit from Social Security and the nest egg you’ve worked hard to build. In fact, ideally, the latter will be a greater source of income for you than the former.

But even if you have several different income streams and don’t depend solely on Social Security, it’s important to carefully manage your money in retirement. And following these rules will help you do just that.

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1. Stick to a predetermined withdrawal rate for your savings

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You may retire with a few million dollars in your IRA or 401(k) plan and think: “Wow, I’m all set!” But not so fast. If you’re not careful, you could end up spending your savings at a faster rate than expected. That’s why instead of making random withdrawals, it’s better to do some math (either on your own or with the help of a financial advisor) and arrive at an interest rate that works for you.

For years, financial experts have said they use a 4% withdrawal rate as a starting point. Depending on your situation, this can be either too aggressive or too conservative. The rate you get should depend on factors such as how long you expect to live and what other sources of income you have at your disposal. But it’s important to find that indicator before knocking on your nest egg.

2. Know what taxes you are liable for

A number of your retirement income streams may be taxed. Withdrawals from a retirement plan, for example, are subject to taxes unless you keep your savings in a Roth IRA or 401(k). And while you can use an HSA for any purpose without penalty after you turn 65, non-medical withdrawals will be subject to taxes.

You may also pay taxes on some of your Social Security benefits. Not only do some states provide tax breaks, but if your non-Social Security income is moderate, there’s a good chance your benefits are subject to federal taxes. Be aware of your IRS liability so you can plan around it.

3. Stick to a budget

When you’re on a fixed retirement income, you can’t just spend money randomly. Instead, you should have a budget that you monitor regularly to make sure you don’t go overboard.

To be clear, that budget can include fun things like travel and entertainment; you don’t have to limit yourself to basic expenses. The key, however, is to keep track of your spending, always know where your money is going, and avoid going over your monthly allowance so you don’t have to take extra out of your retirement plan.

Whether money is tight or plentiful in retirement, it’s important to take control of your finances. If you determine your nest egg withdrawal rate early, understand your tax liability, and stick to a budget, you’ll be in a great position to extend your income, avoid financial stress, and thoroughly enjoy your senior years. full

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