The average life expectancy in the U.S. is higher than ever, which means retirees will need to make sure their money lasts longer than ever before, too. A June 2020 TD Ameritrade survey found that swaths of older American workers plan to work for as long as possible, as a result of the economic crisis.

That plan may or may not work out, but if you worry about your retirement money running out after you retire, here are six strategies to make sure your money lasts as long as you do.

1. Opt into automatic contributions

The first step any employee should take, if it’s available to them, is to set up automatic contributions for their employer-sponsored retirement plan. These plans usually come in the form of a 401(k), but government employees can see their contributions made into a 403(b) account, among others.

Even 2 or 3 percent of your monthly income contributed towards retirement can make a big impact. Regardless of how small the contribution, setting up an automatic withdrawal every month – usually when you first begin the job, but it can be done at any time – can get you on track.

Setting up automatic contributions also eliminates the most difficult part of saving and investing –  getting used to your monthly paycheck after withdrawing money intended for other goals.

Making these contributions as early as possible will also ensure the money has longer to grow, which can yield larger returns to last you longer into retirement.

2. Use your employer’s match

Once you’ve set up your automatic contributions into an employer-sponsored plan, the next best step is to take advantage of your employer’s contribution match. Many companies offer to match what you contribute into your 401(k) or other qualified plan up to a certain percentage.

For example, let’s say you contribute 4 percent of your monthly salary to your 401(k), and your company provides up to a 4 percent match as well – this means your contribution will be automatically doubled. In effect, you can double your money with no risk.

But if you contribute 2 percent of your salary, and your company provides a match up to 4 percent, you’ll get only 2 percent. So the employer match incentivizes employees to contribute at least as much as their company matches, as employees will want to get the most out of this “free money.”

On the other hand, if you contribute 8 percent of your salary (and your company matches up to 4 percent) your match will simply max out at 4 percent.

Each company has its own rules and limitations when it comes to plan matches. Some might require you to work at the company for a certain amount of time before they begin to match your contributions, sometimes a year or two. This is called a “vesting period.” It’s important to check with your employer to see what their specific plan regulations are.

3. Invest spare money

Once you have set up automatic contributions to an employer-sponsored plan, it’s important to take advantage of other retirement plans.  Investors have the option of putting money into a traditional IRA or Roth IRA (Individual Retirement Account) that can help supplement their 401(k) income.

Both traditional and Roth IRAs are intended for retirement and can begin distributions at the earliest age of 59 ½. The contribution limit to any IRA is $6,000 for 2022, and if you are aged 50 or older can contribute $7,000 total to IRA accounts as a “catch-up” provision.

Contributions to traditional IRAs are taxed similarly to traditional 401(k)s – money goes in pre-tax, grows tax-deferred, and is taxed on the back end during distributions. In contrast, Roth IRA money goes in after-tax, grows tax-free, and is taken out tax-free in retirement.

4. Consider toggling accounts during distributions

Once you’ve set up both a 401(k) and IRA, consider toggling the withdrawals during the distribution phase to allow room for growth even during retirement. This strategy works particularly well with a traditional 401(k) and Roth IRA.

Let’s assume you’ve had both a traditional 401(k) and Roth IRA, and now you are ready to start drawing on that money for your retirement. The 401(k) withdrawals will be taxed as ordinary income, but the Roth can be withdrawn tax-free.

Instead of drawing on both at the same time, consider alternating withdrawals from each account. By withdrawing from only the Roth IRA in one month and then the traditional 401(k) in the other, you can reduce the amount of taxable income you draw from the 401(k), reducing your taxable income.

By paying lower taxes, you’ll keep more money in your accounts working for you.

5. Invest with income in mind

After you’ve locked in your retirement plan contributions, it’s a good idea to invest in income-producing investments.

One such investment is dividend stocks. These are stocks that can produce a return like any other stock, but can also pay out a monthly dividend back to investors. Dividend stocks are often large, blue-chip companies that might not provide as much return as riskier investments, but can provide safety and income – both critical for any retiree.

Bonds, specifically government bonds, are another income-producing investment that can provide security and extra income to investors who are looking to not have their money simply sitting in cash.

6. Create second income streams now

One of the best ways to safeguard against running out of money is to keep making more of it. Even after you retire, you can continue to pursue passions or utilize a lifetime of earned skills to generate extra income.

Be it through a side hustle or part-time job, setting up a secondary source of income now can allow for another stream of income to fall back on once you retire. You can still collect your full Social Security benefit and have extra income on the side as long as you are past the full retirement age (for most people, this is 67.)

Side hustles for retirees have become more ubiquitous in recent years, as sites like Upwork and Fiverr have allowed those with expertise in almost anything to monetize their abilities where there is demand.

Bottom line

Increased life expectancies means retirees need to plan for longer retirements. By making sure to contribute as early as possible to defined retirement plans and getting smart about investing your time and money in ways that will continue to generate income, you can make sure your money will last as long as you do.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.