If you’re worried about running out of money in old age, you’re not alone. Running out of money is a major concern for most people retiring or nearing retirement. And there are very good reasons to be concerned — very concerned.
Explore this fear. Is it right to be scared? What can you do about your concerns?
Running out of money is the biggest concern after retirement
Studies have shown that lack of money is the number one reason people fear retirement.
Scarier Than Death: research from Allianz Life It suggests that more than 60% of baby boomers are more afraid of running out of money than dying.
And the younger cohort is even more afraid. 77% among those aged 44-49. (And a whopping 82% if they are married to dependents.)
Research published by American Institute of Certified Public Accountants (AICPA) reports that 57% of financial planners say lack of funds is their client’s top retirement concern.
But retirement savings isn’t the only concern.of Transamerica Center for Retirement Studies Only 37% of survey respondents said running out of savings was their top concern. Deteriorating health requiring long-term care worried her 47% of respondents. Reducing or eliminating Social Security scared 47% of her. Losing independence was the main fear for 38%.
you are right to be scared
According to a detailed report of Welfare Research Institute (EBRI)In fact, many of us are very likely to run out of money, regardless of income level. 40.6% predict they will run out of money for retirement.
And while the data varies dramatically by people’s pre-retirement income levels, even those in the highest income quartile aren’t immune to shortfalls.
- 83% of baby boomers in the lowest income quartile will run out of money after retirement
- 47% of second lowest quartile of baby boomers run out
- 28% of baby boomers in the second highest quartile run out
- 13% of baby boomers in the highest income quartile run out
Wow!
The above data is for people who have retired 35 years. However, if you are living in retirement for 20 years, the data are slightly better. 81% of the lowest income quartile and 8% of the highest income quartile will run out of money as the retirement period shortens.
Will almost 1 in 10 of the richest among us run out of money in retirement? Yes!
Wow! Wow! Wow!
Why is lack of funds a concern?
There are a variety of very real and tangible factors contributing to growing concerns and increasing risks of underfunding.
Longer life expectancies, declining active savings, rising costs, stagnating wages, and declining numbers of people enrolled in pension schemes are some of the main reasons that assets are at risk of running out.
What happens when you run out of money in old age?
First, the good news:
In these scenarios, running out of money when you retire doesn’t mean you’re completely broke.
Running out of money usually means you’ve used up all your retirement savings and home equity, leaving you with any source of income, including Social Security and pensions, if you’re lucky.
Most people who ran out of retirement money lived on their Social Security income, pursued part-time jobs, and probably cut costs dramatically.
And what’s the bad news?
You are likely no longer in your own home, may be enrolled in a low-income program, and may rely on family members for shelter and support. You may currently have Medicaid instead of Medicare. You are probably living in poverty or at a very low income level.
Will you run out of assets when you retire?
Of course, the answer depends on hundreds of different factors.
To find out if you run out of money, create an account with NewRetirement. You can immediately see if you are at risk. In fact, the system uses both optimistic and pessimistic scenarios to assess the risk of running out of money.
There are multiple charts to help you assess your age without money and assess whether you are well prepared. Try different life expectancy options to stress test your plan.
How to avoid disaster?
If you don’t want to run out of money, you need to take action.
Unfortunately, there aren’t enough people doing what they need to do. A Transamerica study found that:
- Only 18% of survey respondents are taking proactive steps to address issues related to planning for safe retirement.
- Another 35% had considered the issue but had not yet decided on a specific course of action.
Take action!
NewRetirement Retirement Planner makes it easy to get started and take action.
NewRetirement offers the best do-it-yourself retirement planning software online. The system is completely comprehensive and gives you reliable answers about your secure future prospects.
There are three steps you can take:
1. Please detail your current and future financial situation.
The best way to avoid running out of money after retirement is to have a very good, detailed and fully personalized retirement plan based entirely on you and your needs.
To get started:
- Please record the current situation in as much detail as possible.
- Envision the details of your future and plan the small and big tweaks and changes that will allow you to achieve the retirement you want without running out of money.
2. Address medical and potential long-term care costs:
High medical and long-term care costs are big reasons why people run out of retirement funds. These costs usually occur near the end of life.
About 70% of people who turn 65 will need some form of long-term care during their lifetime, according to the report. U.S. Department of Health and Human Services, but few are ready to pay for that care.According to this, the cost of long-term care is exorbitant, averaging between $51,000 and $102,000 per year. investigation — Not covered by Medicare.
If you’re worried about running out, it’s a good idea to have a plan to cover these costs. NewRetirement Planner helps you estimate your medical expenses. You can also run scenarios for different methods covering long-term care.
3. Tweak the situation to discover what works.
Make any of the following adjustments to your plan to strengthen your prospects and give them confidence in the future.
Don’t worry. Start now to create and improve your retirement plan.
