Will You Run Out of Money in Retirement?

Asset Protection Group | Jan 15, 2022

As we look forward to retirement, one of our primary concerns is whether or not we’ll run out of money. After all, for some lucky people retirement can last two decades or more! So, if you’re trying to assess whether your savings will last, consider the following factors.

Have you estimated your life expectancy? Today, about one in four 65-year-olds will live to age 90 (according to the Social Security Administration). A longer lifespan is great, of course, but you will also need to live on your retirement income for much longer.

Have you considered inflation? Over about 20 years, your money will be worth about 60 percent less, thanks to inflation. What sounds like a lot of money right now might not actually amount to as much as you’d think.

Do you have a long-term care plan? If you need long-term nursing care at some point, the expense could quickly drain your retirement fund.

What about healthcare costs? Medicare won’t actually cover everything you need with regard to healthcare. According to Fidelity Investments, you could potentially have to spend about $250,000 out of pocket over the course of your retirement!

Did you consider income taxes? Many retirees are surprised to learn that their retirement income can indeed be taxed! If you don’t have a plan for income taxes, your budget might not stretch as far as you had imagined.

Are you divorced, or considering it? Potentially losing half of your retirement savings would be a major blow to almost anyone.

How will you afford large, unexpected expenses? Do you have a plan for large expenses, such as a new roof or major car repair?

Will your spending habits change? Once you retire, you might feel tempted to spend more on travel, dining out, entertainment, or hobbies. Have you factored those expenses into your new budget?

What about your kids? Are you still paying for their college, or do you frequently loan them money? For that matter, what about the costs associated with grandchildren?

Do you have a withdrawal plan? It goes without saying that withdrawing too much from your retirement fund will shorten its lifespan. As you approach your retirement date, schedule an appointment with us to discuss your withdrawal plan. We can help you determine how much to withdraw each year, to help your retirement fund last as long as possible.

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