Making your retirement savings last

You know that you have to save before retirement, but do you know how to make your savings last during retirement? The transition from saving to spending may seem overwhelming, but planning ahead can help. Here are some considerations that can help you successfully navigate your transition from the working world and make your money last throughout your retirement years.

Don’t stop saving.

Continue to contribute as much as you can in the Hewlett Packard Enterprise 401(k) Plan and through outside savings vehicles. The money you save now still has time—maybe even decades—to work for you. In 2026, you can max out your 401(k) by saving up to the IRS limit $24,500 in pre-tax or Roth contributions, and an additional $8,000 in catch-up contributions if you are age 50 or older in 2026. Plus, you have the option to make after-tax contributions—and save beyond the IRS limit—up to $70,000 of eligible pay in 2026. Not sure you can afford to save more? Even small tweaks to your spending and saving habits can help.

Develop a retirement budget.

Think about your idea of a successful retirement and what that includes. Determine your regular living expenses for things like food, housing, and utilities, and estimate your discretionary costs for things like travel and entertainment. Next look at all of your available income sources—such as your Hewlett Packard Enterprise 401(k) Plan savings, outside savings and investments, Social Security, annuities, or a personal or spouse’s pension. (If you are eligible for a pension benefit from HP Inc. or EDS, you can view that benefit amount on NetBenefits.) If you cannot comfortably afford both your regular and discretionary expenses, you may need to reexamine your retirement goals or find another source of income in retirement—such as a part-time job.

Make the most of Social Security.

Social Security is a guaranteed source of income in retirement—and one you worked hard for. So the decision of when to start taking monthly payments is an important one. You can access certain Social Security benefits as early as age 62, but you can begin drawing your full payment sometime between age 65 and 67, depending on when you were born. However, you could receive up to 8% more in future monthly payments for each year that you delay taking Social Security (up to age 70).

Invest appropriately.

You’ve probably heard that as you get closer to retirement, you should invest more conservatively. However, getting too conservative too quickly could expose your investments to the effects of inflation and limit long-term growth potential. And being too aggressive could mean big losses in down or volatile markets. The best approach may be somewhere in between, depending on your risk tolerance, financial situation and time horizon. Remember: neither asset allocation nor diversification ensure a profit or guarantee against loss.

Manage your withdrawals.

How long your savings will last depends on how much money you take out each year as a source of retirement “income.” Fidelity believes that withdrawing 4%-5% each year, adjusted annually for inflation, is usually a good starting point if you retire and begin withdrawing money at age 65. Of course, the specific withdrawal rate that makes sense for you will depend on your personal circumstances.

Factor in taxes.

Consider your potential sources of income in retirement and how they are taxed. Some may be taxable—like any contributions you’ve made to the Hewlett Packard Enterprise 401(k) Plan on a pre-tax basis—while others have the potential to be tax-free—like any contributions you’ve made to the Hewlett Packard Enterprise 401(k) Plan on a Roth basis*. (You can also make after-tax contributions, which are tax-free at withdrawal, but you’ll pay taxes on any earnings when withdrawn.) Now think about your expenses. In some years, you may have to tap into your savings and investments because your monthly income just won’t cover your expenses. If you have only taxable money to draw from, withdrawing a higher-than-usual amount can bump you into a higher tax bracket and increase your tax obligation for that year. So, having a diverse mix of taxable and non-taxable retirement income gives you the flexibility to maintain a steady tax bracket and manage your taxable income when you have unexpected expenses.

Plan to live longer.

Many people don’t realize that there’s a good chance they’ll end up living nearly as long in retirement as they did working. Without some thoughtful planning, you could potentially outlive your savings. To find out how long you may want to plan for, check out the Longevity Illustrator calculator maintained by the Society of Actuaries.

Expect rising health care costs.

The great news is that we are living longer than ever before. However, health care costs are growing rapidly. According to Fidelity Workplace Consulting, a 65-year-old couple retiring in 2024 is estimated to need $330,000 to cover their health care costs during retirement**. Planning for health care costs should be a critical part of your overall retirement savings strategy, since unexpected expenses can quickly deplete your savings and derail your long-term income strategy.

Get help.

As your focus begins to shift from saving for retirement to spending in retirement, there are several resources available to help. Visit NetBenefits where you can estimate how much income you may have or need in retirement, and potential shortfall. You can also develop an investment strategy to help meet your retirement income needs, based on your Hewlett Packard Enterprise 401(k) Plan account as well as any other savings accounts you might have.

While making your retirement savings last during retirement will take some work, it’s not impossible. By planning ahead, you can be in a position to enjoy your retirement for many years to come.

*A distribution from a Roth 401(k) is federally tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following conditions is met: age 59 ½, disability, or death.

**The Retiree Health Care Cost Estimate is based on a single person retiring in 2024, 65-years-old, with life expectancies that align with Society of Actuaries' RP-2014 Healthy Annuitant rates projected with Mortality Improvements Scale MP-2021 as of 2022. Actual assets needed may be more or less depending on actual health status, area of residence, and longevity. Estimate is net of taxes. The Fidelity Retiree Health Care Cost Estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program, original Medicare. This calculation takes into account Medicare Part B base premiums and cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance). It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by original Medicare. This estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

IMPORTANT: The projections or other information generated by the Financial Wellness Dashboard regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Your results may vary with each use and over time.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Keep in mind investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

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