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Best Money Moves for Seniors

Donna Rosato

To have the retirement you want now, you may have to tap a little more of your earning power -- and tap into your spirit of adventure. Here are 6 ways to make it happen.

How to turn assets into income
Stingy stock returns are threatening to upend the standard rule of thumb for making your money last: Withdraw 4% of your assets the first year you retire, adjust annually for inflation, and you'll have nearly a 90% chance of your money lasting 30 years. But that calculation assumes 8% returns for stocks, 5% for bonds.

Given today's low interest rates and choppy stock market performance, some advisers suggest starting at 2% or 3%.

Too little to live on? Learn to balance conservatism and cash flow.

Lock in a minimum
Even without a pension, you can collect a guaranteed check every month for life by buying an immediate annuity (you can shop for one at immediateannuities.com).

The strategy: Put enough in an annuity so that the income it produces, combined with Social Security, covers your basic living expenses. Let the rest of your portfolio keep growing. (Even the federal government is getting behind this strategy: In February the Treasury Department proposed making it easier for workers to buy annuities in 401(k) plans.)

Annuity payouts depend on your age and current interest rates, so today the checks are smaller than five years ago, says New York City financial planner and CPA Michael Goodman. His advice: Buy three annuities over a decade so that you don't invest all your money when rates are low.

Stay nimble
Instead of relying on one withdrawal rate, says Vanguard's Maria Bruno, "be flexible and make adjustments along the way."

When markets do well, you could take out 5% or 6%. In down times for stocks, dial back. Once a year, sit down with a calculator -- try the Fidelity Income Strategy Evaluator at Fidelity.com -- and come up with a safe withdrawal amount based on your expenses and your portfolio's performance.

Minimize taxes
Once you start cashing out traditional IRAs and 401(k)s, the government takes a bite (withdrawals are taxed as ordinary income).

The conventional wisdom is to draw from taxable investments first and let retirement-plan money grow tax-deferred. Save Roth IRAs for last since you never have to take withdrawals.

That's a guideline, not a hard and fast rule. Sometimes it pays to play with the order, says Bill Meyer of advisory firm Retiree Inc.

If, say, 401(k) withdrawals push you into a higher tax bracket, take out just enough to stay in a lower bracket and pull the rest from your Roth.

See more of the world
Stretch out retirement funds by heading overseas, where everything from housing to health care can cost less (though keep in mind that Medicare coverage doesn't apply outside the U.S., so you'll need a private policy).

InternationalLiving.com rates popular retirement destinations on real estate costs, quality of health care, ease of integration, climate, and more.

Top pick for 2012: Ecuador.

Don't ignore rising health costs
A year in a nursing home averages $78,110 a year, says the Metlife Mature Markets Institute. Not including that, a 65-year-old couple today will spend $230,000 on out-of-pocket medical expenses, estimates Fidelity.

Long-term-care insurance can be a safety net, though it's expensive (about $3,000 a year for a couple in their fifties today).

You're a good candidate if you're a woman (longer life expectancy); have a family history of diseases like Alzheimer's, dementia, or Parkinson's; or you have assets of $250,000 to $1.5 million (less and the price is too high, more and you can self-fund).