ARE YOU AT RISK OF OUTLIVING YOUR MONEY?

NEARLY 10,000 AMERICANS TURN 65 each day, eligible to retire and start what should be a new, exciting phase in life. Yet their retirement may be more precarious than ever.

A recent survey by the Alliance for Lifetime Income found that 80% of Americans say they fear running out of money in retirement.

Some of that anxiety is triggered by not knowing how much money youll actually need in retirement. This is based on uncertainty about living expenses such as rising health care costs and inflation. But its related to how much longer we are living: Live long enough, and you risk outliving your savings. Its what economists term longevity risk.

Theres a good reason for this anxiety. A 2019 World Economic Forum report indicates a high likelihood that 65-year-old Americans today could outlive their retirement savings within a mere nine years.

Colin Devine, principal at C. Devine & Associates and an Education Fellow with the Alliance for Lifetime Income, agrees. Based on the retirement savings numbers were seeing today, its almost a near certainty that people are going to run out of money in retirement, Devine says.

While its wonderful to live longer than the average lifespan, its also financially demanding, adds Ken Mungan, chairman at Milliman, a global consulting firm and leader in actuarial products and services.

The challenge that people have is they dont know how long that period of time is going to be, Mungan says. If its significantly longer than average, thats wonderful, but it also presents a scenario where at best youre unable to live the life you want in retirement, and worst you run out of money.

With research showing that only a quarter of baby boomers have saved $200,000 or more for retirement, theres a high likelihood that they will have to significantly reduce their lifestyle expectations to fit a reduced budget, or risk running out of money.

Most Americans will still receive monthly Social Security payments in retirement, but those typically only cover 40% of your pre-retirement income.

A GENERATION WITHOUT PENSION INCOME...