5 Ways to Avoid Running Out of Money In Retirement

5 Ways to Avoid Running Out of Money In Retirement

Here’s the thing: We’re all living longer than any generation before us, and those numbers are only rising. With medical advancements and technological achievements, our life expectancy has increased over the years where some can expect to spend potentially three to four decades in retirement. That’s about as long as you’ve spent working to get to retirement. But it begs the question: How will I know if I’ve saved enough for retirement if I don’t even know how long may I live? What will I do if I just run out of money at the age of 87? It’s not like you can go back to work, nor should you! In today’s show, we’ll discuss five ways to avoid running out of money in retirement, and keep those mistakes from happening.

Outliving your income is a real challenge for today’s retirees. You need to help protect your income while growing it to ensure you’ll always have enough to last throughout your retirement. Every decision you make along the road to retirement can impact the decisions that follow. That’s why it’s so important to make good and prudent decisions early, and to avoid making bad ones. So, let’s start shining a spotlight on five common ways retirees can run out of money in retirement and how to avoid each of them.

So, why is outliving your income becoming more prominent?

Longevity Factor.

We’re all living longer. Life expectancies are on the rise and  retirements are lasting 30 or 40 years. How are you supposed to save enough money to cover all your expenses when you don’t have a paycheck coming in every two weeks?

Avoid Running Out of Money with the Cost of Health Care.

Health care costs rising and they’re rising much faster than inflation. A 65-year-old couple can expect to spend approximately $300,000 on health-related costs during retirement. That’s a lot of money! It doesn’t even factor long-term care costs.

Inflation.

Hypothetical example: Let’s just pretend for a minute you’re 41 years old and you plan to retire when you’re 65, which would be 24 years from now. You’ve sat down and budgeted, and according to your retirement plan, you’ll need $1 million dollars to maintain your lifestyle in retirement. However, thanks to inflation, when you retire at age 65, that $1 million would only be worth about $500,000. Inflation can be a silent killer and can make running out of money in retirement a real possibility if you don’t plan for it.