3 Easy Moves to Make Your Money Last Your Lifetime

By Motley Fool Staff Markets Fool.com

What are the easiest ways to make sure you never run out of money? Social Security may not be enough when you retire, so it's very important to take your financial future into your own hands. We asked three of our experts to explain what you can do to make sure your money last as long as you need it to.

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Source: 401kcalculator.org via Flickr.

Patrick Morris: One thing we can do to help better secure our financial future is attempt to increase our savings rate each and every year.

In a previous article, I used an example of how a 28-year-old -- named Sam -- who saved 5% of his $35,000 salary -- which grew 3% annually -- and invested in an index fund that mirrored the historical return of 9.6% delivered by the S&P 500 would have $703,698 when he retired 35 years later.

But let's get a little ambitious and say he ups his savings rate by just 0.1% each year. So when he's 29, he'll save 5.1% of his $36,050 salary, and by the time he retires at 62 he's saving 8.5% of his income. Moody's recently found for those 55 and older, the savings rate is 13%, so that's by no means an unrealistic guess.

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How much would Sam have when he's 63? $862,695, or 22.5% more than the original scenario.

In investing -- and in many areas of life -- a little bit goes a long way. A marginal boost in the amount we save each and every year can have a major impact on our total retirement savings.

Selena Maranjian: The best way to make your money last your lifetime is, obviously, to have plenty of money. That's easier said than done, though. Many of us are simply not where we should be or want to be in terms of our retirement savings. We might have gotten a late wake-up call and a late start, or perhaps we've been saving for a long time, but just haven't been able to save a lot or see our money grow very quickly. Still, all is not lost.

One good way to turbocharge your nest egg, if you can pull it off, is to work a few more years and retire a little later. Let's assume you've amassed a retirement account of $100,000 by age 40, and that your money is growing at about 10% annually, the stock market's long-term average. See how it grows:

By age... Nest egg grew for... And became...

15 years

58 18 years $556,000
60 20 years $673,000
62 22 years $814,000
65 25 years $1.1 million
67 27 years $1.3 million
68 28 years $1.4 million
69 29 years $1.6 million
70 30 years $1.7 million
72 32 years $2.1 million

Clearly, whatever your desired retirement age is, you can really build value by just putting it off for a year or two. There are other benefits to delaying your retirement, too. For one thing, not only is your nest egg growing larger, you're also delaying tapping it and shrinking it. You'll probably enjoy a few more years of employer-sponsored health insurance, too, saving some spending there. And finally, if you also delay starting your Social Security benefits, you can increase them by 8% per year from your normal retirement age to age 70.

Still, you might find yourself out of a job not voluntarily, and you might not earn the market's average 10%, either. To combat these, you can save more aggressively. Remember -- the table above doesn't feature additional investments, which you should make.

Dan Caplinger: One of the best ways you can help make your money last a lifetime is to push your comfort zone and take on a bit more investing risk. I'm not saying everyone should go out and put every single penny of their life savings into a high-risk stock, but far too many people take no risk at all with their money, and therefore miss out on some huge potential gains.

For instance, right now, the best-paying federally insured savings accounts pay about 1% interest on your money. If you have $100,000 in that account at age 40, and you keep it there for 25 years, you'll have about $128,000 when you retire at age 65. By contrast, if you invest half of that money in stocks earning 10% annually and keep the rest completely safe, you'll have more than $605,000 when you retire -- nearly five times as much.

Sure, if you go further and put everything in stocks, then as Selena points out, you'll be a millionaire in retirement. But even those who aren't comfortable with an all-or-nothing approach shouldn't hesitate to put some of their money into higher-returning investments, because the payoff is simply too good to pass up.

The article 3 Easy Moves to Make Your Money Last Your Lifetime originally appeared on Fool.com.

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