Running out of money in retirement is a major concern for older Americans, especially since so many are considerably behind on savings. According to a 2016 Transamerica study, 43% of workers 50 and older claim that their greatest retirement-related fear is outliving their savings. A 2015 survey released by the American Institute of CPAs had similar findings, with 57% of financial planners listing running out of money as their clients’ primary retirement concern. This sentiment is further driven home by an Allianz study of over 3,000 baby boomers in which 60% were more afraid of outliving their savings than actually dying.
AAII Weekly Survey Question
So what is the attitude among AAII members when it comes to worrying about running out of money in retirement? To find out, last week’s survey question asked:
How worried are you about running out of money in retirement?
Here are the results:
In all, 1,785 readers participated.
The majority of respondents—59%—say they are not worried at all about running out of money in retirement. This level of confidence is usually buoyed by having a strong, well-documented plan and the discipline to stick to it.
Only 36% of readers say they are somewhat worried about running out of money in retirement while 4% are very worried. However, it’s not too late. AAII offers a number of resources to help you maximize your retirement nest egg as well as ways to boost it leading up to retirement.
Here are just a few recent articles AAII has published related to retirement planning:
- Grasshoppers & Ants in Retirement
- Quantifying the Value of Retirement Accounts
- Retirement Planning Strategies Following the 2017 Tax Act
Weekly Special Question
Unfortunately, some retirees face the reality that their savings are not enough to see them through retirement. Faced with this possibility, last week’s special reader question asked:
What steps would you take if you thought you were going to outlive your retirement savings?
In all, we received 382 responses. Generally speaking, the results fell into two categories: 1) changing their lifestyle (53%) or 2) boosting their income (34%).
Among those saying they would change their lifestyle if they were faced with the possibility of running out of money in retirement, an overwhelming majority (82%) say they would scale back on their spending to stretch their retirement dollars. Another 11% said they would downsize their homes or relocate to save money and the remaining 7% said they would save more.
For those who said they would generate more income, 54% said they would return to the workforce if they thought they were going to run out of money in retirement; 13% said they would sell assets to boost their liquidity; and 12% said they would invest in an annuity.
Here is a sampling of the responses we received as to the investment mistakes our readers have made:
- “Spend less & save more.”
- “Buy a product with life income, or rely on Medicare with early disposal of assets to qualify for welfare.”
- “I would continue to work at least part-time until I was comfortable with my retirement situation.”
- “Sell assets like second home.”
- “Hire a financial adviser to identify cost-effective solutions.”
- “Change to Jim Cloonan’s retirement portfolio from the book ‘Investing at Level3.'”
- “Never given it a thought.”
- “Buy the nicest spot in the trailer park and then stock up on Ramen noodles.”
Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at www.aaii.com/memberquestion.