5 Tips to Avoid Outliving Your Retirement Savings

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If you think the typical American retires at age 65 and then walks away from the working world, you might be surprised. Almost two out of three Americans over 55 say they are planning to work past the age of 67 for financial reasons, according to a new survey commissioned by the Indexed Annuity Leadership Council.

Having a comfortable retirement is possible, but only if you adopt a long-term view, understand how to use the best savings vehicles, and plan ahead.

Here are five tips to prepare for retirement so working longer is voluntary and never a burden as you age:

Tip #1: Know what your retirement lifestyle will cost

Figuring out how much your golden years will cost is the most important, but most difficult, part of retirement planning.

If you're in good health, don't have much debt, and plan to stay close to home most of the time, you might need 70 percent to 80 percent of your pre-retirement income to live comfortably in retirement. But if not, you might need more income than you relied on before retirement.

So, now's the time to be honest with yourself about how long you're likely to live and how you want to live in retirement. Start by analyzing your current expenses and consider if they'll change in the future.

For help crunching the numbers and creating a financial plan use online retirement calculators.

Tip #2: Make saving more important than spending

The Indexed Annuity Leadership Council survey asked participants to describe how they've saved or are saving for retirement. Only 41 percent said they've saved enough or more than they need.

One of the keys to retirement planning success is to create a saving goal, such as 10 percent to 15 percent of pretax income, that you stick with no matter what. Automate the process with direct deposit or recurring bank transfers so you put retirement savings on autopilot and make it a higher priority than spending.

The sooner you begin, the more time your money has to grow. Don't worry if you're getting a late start, just put a solid plan in place and start saving now!

Tip #3: Use tax-advantaged savings vehicles

There are many different ways to save for retirement, but the best options come with tax advantages that help you grow and keep more of your savings.

Tax deferral is a powerful benefit because the money in your account can grow even faster. When compounded over time, your total savings can increase, generating more income for you to enjoy in retirement.

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Consider using a fixed indexed annuity (FIA) to achieve your retirement goal. It's an insurance product that pays you income in exchange for your premium payment(s) according to a contract. It allows you to enjoy potential growth that's linked to a market index (such as the S&P 500), while protecting your savings from any downside loss.

With an FIA, your deposits into the account are not tax-deductible; however, you don't owe tax on your interest earnings until you or your beneficiaries receive money from the account. In addition, annuities don't have government-imposed contribution limits, so you can save as much as you want for retirement every year.

Traditional retirement accounts -- such as a workplace 401(k) and an Individual Retirement Arrangement (IRA) -- allow interest to grow tax-deferred until you take withdrawals. You can to contribute up to a certain amount each year on a pre-tax basis and choose from a wide variety of investment options.

You can use this calculator to compare the tax advantages of saving with an annuity versus a taxable account: What Are the Tax Advantages of an Annuity? (Calculator)

Tip #4: Consider relocating to cut expenses

If you live in a relatively expensive area of the country, relocating can be the key to cutting expenses and enjoying a new lifestyle. A recent project called the Changing Face of Retirement in America examines the widely varying retirement experience across the nation.

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The project's photo essay highlights Christine Rivera, a 62-year-old Bronx resident, who is considering a move to North Carolina to make retirement more affordable and to be closer to family. "As you get older, you tend to want more of a peaceful environment, as well as a peaceful life," she says.

But Christine still believes that she'll continue working out of necessity into her early 70s.

Tip #5: Get help from a financial pro

Having a happy and fulfilling retirement depends on your willingness to plan ahead and carefully consider how you want to spend time in the future. But it can be difficult.

According to the Indexed Annuity Leadership Council survey, 54 percent have never received any professional financial advice. If you need help taking control of your finances or just need a second opinion, consider getting help from a financial pro to make sure you're on the right path.

To sum up, building a diversified investment portfolio using tax-efficient saving vehicles, such as fixed indexed annuities and retirement accounts, is the best way to grow your savings and make sure you have plenty of income for life.

Having a retirement savings plan that includes a fixed indexed annuity will give you guaranteed income, no matter what happens in the financial markets. So be sure to consider this powerful savings vehicle. The security it provides will take away the fear of outliving your retirement savings, so working longer is your choice rather than a hard necessity.

Laura Adams is a personal finance expert, award-winning author, spokesperson, and host of the top-rated Money Girl Podcast. Learn more at LauraDAdams.com.