ARE YOU retired or thinking about retiring? Is running out of money during retirement one of your biggest concerns? Given the uncertainty of the economy and the markets, longevity risk is on many retirees’ minds. Although not often thought about, the reverse situation can also be an issue. Getting to the end of life with a big pile of money and lots of unfilled dreams isn’t pleasant either.

With these concerns in mind, here are our suggestions for how to balance retirement frugality with lifestyle enjoyment:

Have a budget: A careful budget can help you control spending and is a good starting point for estimating your monthly withdrawal needs. Many think they will spend less during the retirement years, but for most this may not happen.

Set a realistic withdrawal rate: A safe withdrawal rate is an amount of money, expressed as a percentage of your portfolio, that can be withdrawn every year and that is most likely to leave just the right amount of money at the end of a retiree’s lifespan.

Establish an emergency reserve: An emergency reserve will help you avoid taking unplanned money out of your portfolio.

Consider inflation: Inflation, which is a general increase in prices, can be a long-term threat to the purchasing power of your retirement savings. An example of this is a postage stamp — one now costs 50 cents, but back in 1958 one cost only 4 cents.

Be realistic: How much are you actually spending? Can this amount be reduced? Have you factored in health care costs?

Plan for Social Security benefits: Carefully review your Social Security benefits and develop a strategy to maximize these. The amount you receive depends on multiple factors, such as the age you begin your benefits and work history. You might want to take into consideration your cash flow needs, health and expected longevity when deciding a starting date to receive benefits.

Consider working part time: Earning an income during retirement means needing to spend less from your portfolio, which leaves more of your savings to remain invested and growing. Just make certain to assess the impact that working has on your Social Security benefits.

Minimize taxes: Develop a good understanding of the types of accounts you own. For example, you could have taxable investment accounts, Traditional IRAs and Roth IRAs. Barring any nondeductible contributions, distributions from Traditional IRAs will generally be taxed as ordinary income. If certain parameters are met, distributions from Roth IRAs are generally tax free.

Starting at age 70½ you will have to take required minimum distributions from your Traditional IRA. You will need to consider the impact this will have on your income taxes. Roth IRAs do not have this requirement.

If you have both retirement and after-tax accounts, consider where to draw income that will have the most optimal tax effect. Perhaps taking money from a retirement plan account while you are in a low tax bracket is a good decision. Just put any money you didn’t spend in an after-tax account for later use.

Hold some equities: Having some stocks in your portfolio can help your retirement income keep pace with inflation. Make sure the percentage of equities is appropriate for you. Too much stock exposure and volatile markets can cause anxiety and make you question your allocation. On the other hand, too little stock exposure may cause your portfolio to have a lower expected rate of return that will eat away at your purchasing power.

Do some research: There is an abundance of studies and articles on retirement that could really help you plan.

Get professional help: Have a retirement plan prepared by a financial planner and monitor the results.

As you can see, it takes a bit of work to stay retired, but it is well worth the effort for the peace of mind it can bring.

Marc A. Hebert, MS, CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to

Your question and his response might appear in a future column.