Estate Read Time: 3 min

Managing the Risk of Outliving Your Money

"What is your greatest retirement fear?"

If you ask some pre-retirees this question, "outliving my money" may be one of the top answers. In fact, 42% of workers say they fear outliving their savings and investments.1

Retirees face greater "longevity risk" today.

The Census Bureau says that Americans typically retire around age 63 for women and 65 for men. Social Security projects that today's 63-year-olds will live into their mid-eighties, on average. This is a mean life expectancy, so while some of these seniors may pass away earlier, others may live past 90 or 100.2,3

If your retirement lasts 20, 30, or even 40 years, how well do you think your retirement savings will hold up? What financial steps could you take in your retirement to try and prevent those savings from eroding? As you think ahead, consider the following possibilities and realities.

How will Social Security work in the future?

For decades, Social Security took in more dollars per year than it paid out. That ongoing surplus - also known as the Social Security Trust Fund – may face funding challenges as early as 2034. Congress may act to address this financing issue before then, but the worry is that future retirees could get slightly less back from Social Security than they put in. It's critical that pre-retirees estimate the amount of Social Security benefits they are expected to generate in the future.4

Preparing for out-of-pocket health care costs.

You can enroll in Medicare at age 65, but how do you handle the premiums for private health insurance if you retire before then? Striving to work until you are eligible for Medicare makes economic sense and so does setting aside money to pay for health care costs. A healthy couple retiring at age 65 can expect to pay nearly $208,000 in lifetime out-of-pocket healthcare expenses, even if they have additional coverage such as Medicare Part D, Medigap, and dental insurance.5

Luck is not a plan, and hope is not a strategy.

Those who are retiring unaware of these factors may risk outliving their money. Creating a strategy may help you better prepare for retirement.

1. TransamericaCenter.org, 2021
2. TheBalance.com, 2021
3. Social Security Administration, 2021
4. Kiplinger.com, 2021
5. HealthView Services, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

A Fruitful Retirement: Social Security Benefit

A Fruitful Retirement: Social Security Benefit

Taking your Social Security benefits at the right time may help maximize your benefit.

The Business Cycle

The Business Cycle

Understanding the economy's cycles can help put current business conditions in better perspective.

The (Other) Talk: Preparing Your Parents for Retirement

The (Other) Talk: Preparing Your Parents for Retirement

For much of our lives, our parents are the ones who have to bring up uncomfortable topics. (Just think back — and squirm — to their birds and bees talk. Awkward, right?) But once we become adults, sometimes it’s our turn to start sensitive conversations.

 

Have A Question About This Topic?







Thank you! Oops!

What's My 2023 Tax Bracket?

Check out this handy reference of updated ranges from the IRS in case your designated bracket has changed.

Budget Check Up: Tax Time Is the Right Time

Tax preparation may be the perfect time to give the household budget a check-up.

Protection from a Financial Emergency

A financial emergency can happen to anyone.

View all articles

Comparing Investments

This calculator compares the net gain of a taxable investment versus a tax-favored one.

Should I Pay Off Debt or Invest?

This calculator will help determine whether you should invest funds or pay down debt.

Capital Gains Tax Estimator

Use this calculator to estimate your capital gains tax.

View all calculators

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

View all presentations

Video: The Independence of Financial and Emotional

Greater financial and emotional confidence brings greater independence. Isn’t that what it’s all about?

Behavioral Finance

An amusing and whimsical look at behavioral finance best practices for investors.

To Buy or Not to Buy

The decision whether to buy or rent a home may have long-term implications.

View all videos