What If You Run Out of Money?

[Rustic23]

I did not retire when I had enough money, I retired when I had more than enough money, therefore I don't see this happening. OK, maybe, hyper inflation, some non covered medical something, but honestly there is a risk area that's just not worth worrying about.

I do however have a sibling that falls into that category. For most of the reasons listed in prior post, she finds herself 73 years old, needs to work, and SS as the only stable income. She is in the process of declaring bankruptcy for the fourth time! While I don't thing DW and I were here back up plan, that is what it is.

[joeea]

Quote:

Originally Posted by Alan I'm far from an expert on SS but I thought the surviving spouse began receiving the SS of the deceased spouse. On the strength of that assumption I am planning to wait until 70 before claiming SS as a bit of extra insurance for my wife.

Me too.

Sadly, the woman I was referring to had a husband who didn't bother to take that into consideration.

[street]

My parents died with nothing the nursing home got what they had saved all their life. Running out of money is a reality and can happen and will happen to some.

[robnplunder]

Quote:

Originally Posted by SoReadyToRetire Does anybody actually know anybody who ran out of money after they retired because they didn't save enough?

Yeah, I know a lot of people - old relatives and their friends. Here in California, in addition to SSA, they get so much social programs/helps that making a decent (YMMV) leaving is not an issue. In fact, I sometimes wonder how much of that is contributing to CA's budget deficit.


It's the loneliness, and neglect which are more of a hardship than not having enough to live.

[Mmm Rrr]

I was raised in a family of 7 children, my parents always just squeaked by financially. It was a happy childhood, but extras were rare. My parents retired due to my Dad's ill health and lived entirely on SS for necessities and financial help from the offspring for anything extra (cable tv, cell phone, etc). It was hard to go to the grocery store with my mother and see her carefully considering what produce to buy based almost entirely on price.

Fast forward... of the surviving children 4 have planned carefully (and to be fair were also lucky in their careers and marriages) and are in good shape for the rest of their lives. 2 are squeaking by in a similar pattern to my parents.

I've seen many people run out of money. As others have said if you know about services available, and you live in the right state you can get some help. And having affluent children is often a welcome safety net (although hard on the pride in my parents' case).

Looking around at my friends and neighbors I think that at least half of them are going to run out. I shudder to think what is going to happen to our already thinly stretched social programs. In my area assisted living and nursing homes are already limiting the number of beds available for Medicaid recipients.

[marko]

Quote:

Originally Posted by street My parents died with nothing the nursing home got what they had saved all their life. Running out of money is a reality and can happen and will happen to some.

This does happen and my earlier posts were not intended to sound cold or heartless.

It happens all the time but in planning for RE, I think one should play the percentages and focus on the 80% of people who RE, live a good life and die with a decent residue.

Every RE'd person on this forum made a certain leap of faith that the worst possible scenario will not happen.

As we've all learned throughout our lives, everything has a risk: marriage, career, kids, work and investments to name a few. You do your best and prepare your best but sometimes there's no accounting for the broadside. You cannot plan for every eventuality and expense, otherwise you'd never leave your house.

Back to the OP's question, there are situations that will leave you penniless. Retiring early without sufficient cushion and/or overspending will almost guarantee that. There are social back-ups out there, some good, some iffy at best.

If you find yourself penniless and drooling at 97 years old, well....maybe it was all worth it. If you think you'll be in trouble at 67 years old, maybe you need to re-think your plans.

S**t happens along the way. You figure the odds, roll the dice and go.

[daylatedollarshort]

We're into sustainable living and a low consumption lifestyle, so our expenses are quite a bit less than what we could spend in retirement. Plus we could downsize, work part-time, move to a lower cost of living area, cheaper country, etc. We'd have to come across some pretty extreme circumstances to run out of money. It is a low probability event and not something we worry about. If we built a mother in law unit on our house, we could live rent free and collect rent on the main house which would cover all our expenses. If we were both in nursing home care in the U.S. for decades I guess then we would eventually run out of money but most nursing home stays are under a few years.

[imoldernu]

Truth here... have you looked at U.S. Government Welfare Programs?

[Walt34]

I'm not all that concerned about it for us. I have a DB pension with 100% COLA and SS as the main sources of income. The pension is well over 90% funded and even if SS takes a 73% haircut we'll still be fine.

But I do have relatives who will be working until they physically cannot. What happens then depends a lot on where they live and the safety nets in place in that area. One is in her 80's has an SS income of about $800/month plus maybe $100/month from a daughter, but lives in a very nice heavily subsidized apartment building in MD. She can even afford a beater car. But she lives in an affluent area with liberal benefits for low income people.

Here in WV things are not so nice for someone in that position as WV is not a wealthy state.

[Bogie]

Quote:

Originally Posted by gauss I would speak to an elder-care attorney about this. My understanding is that any expenses you pay for your mother would be considered gift income and would reduce her medicaid for long term care dollar by dollar, assuming that you don't submit fraudulent paperwork when you re-qualify each year. Medicaid long term care would allow her a small amount each month to be used for personal expenses (ie $50 or so). I may be mistaken on this, but this was my conclusion after briefly researching, on my own, if any Medicaid planning would benefit the individual (as opposed to their heirs). If anyone know more about this I would be interested as we have possibly two mothers in my family who may be also on a trajectory to deplete funds down the road. -gauss

I believe you can make "in kind" contributions directly towards expenses by paying towards the rent, etc... If you pay the bill directly it doesn't count directly since you aren't giving the money to the person getting medicaid. See an elder law attorney but this is my understanding. It might count against Medicaid but it probably isn't dollar for dollar. Qualified Disability Trusts are set up for this exact purpose, so the trustee can supplement expenses for a person and not lose benefits.

[bclover]

Quote:

Originally Posted by marko This does happen and my earlier posts were not intended to sound cold or heartless. It happens all the time but in planning for RE, I think one should play the percentages and focus on the 80% of people who RE, live a good life and die with a decent residue. Every RE'd person on this forum made a certain leap of faith that the worst possible scenario will not happen. As we've all learned throughout our lives, everything has a risk: marriage, career, kids, work and investments to name a few. You do your best and prepare your best but sometimes there's no accounting for the broadside. You cannot plan for every eventuality and expense, otherwise you'd never leave your house. Back to the OP's question, there are situations that will leave you penniless. Retiring early without sufficient cushion and/or overspending will almost guarantee that. There are social back-ups out there, some good, some iffy at best. If you find yourself penniless and drooling at 97 years old, well....maybe it was all worth it. If you think you'll be in trouble at 67 years old, maybe you need to re-think your plans. S**t happens along the way. You figure the odds, roll the dice and go.

Amen, well said

[bclover]

Lets see, lost my husband at 52 years of age in 2013
Baby brother loses his battle with cancer 2014. 50 years old.
Best friend of 40 years dies of heart attack in 2015. 55.

Op, going broke would be a walk in the park after the decade Ive had.

[Teacher Terry]

BC; wow that is so awful. I am so sorry. I lost 3 close friends between the ages of 59-67 so $ is not one of my top concerns either.

[razztazz]

Quote:

Originally Posted by gauss I would speak to an elder-care attorney about this. My understanding is that any expenses you pay for your mother would be considered gift income and would reduce her medicaid for long term care dollar by dollar, assuming that you don't submit fraudulent paperwork when you re-qualify each year. Medicaid long term care would allow her a small amount each month to be used for personal expenses (ie $50 or so). I may be mistaken on this, but this was my conclusion after briefly researching, on my own, if any Medicaid planning would benefit the individual (as opposed to their heirs). If anyone know more about this I would be interested as we have possibly two mothers in my family who may be also on a trajectory to deplete funds down the road. -gauss

I had a similar situation with supporting a relative. I was sending him money to help pay the rent, utilities, medical insurance etc. When he eventually went to file for SNAP and Medicaid they wanted to know if he was so hard up how was he paying his bills all that time?

I had to send them a letter verifying I was a blood relative and the help was strictly temporary for emergency purposes only.

I wish I had known about the in-kind payments at that time. Could have saved some white knuckles.

[marko]

Quote:

Originally Posted by bclover Lets see, lost my husband at 52 years of age in 2013 Baby brother loses his battle with cancer 2014. 50 years old. Best friend of 40 years dies of heart attack in 2015. 55. Op, going broke would be a walk in the park after the decade Ive had.

I'll return your complement:
Amen and well said.
And add: God bless

[Cut-Throat]

Quote:

Originally Posted by robnplunder Yeah, I know a lot of people - old relatives and their friends. Here in California, in addition to SSA, they get so much social programs/helps that making a decent (YMMV) leaving is not an issue. In fact, I sometimes wonder how much of that is contributing to CA's budget deficit.

Sorry, California has a $9 Billion Dollar Budget Surplus in 2018.

[Live And Learn]

Quote:

Originally Posted by SoReadyToRetire So if we wouldn't die if we ran out of money when we were, say, 87 (which is what FireCalc is currently showing for me, for example),

There is no way I would have ever retired if FireCalc had my funds depleted by 87 ! I wanted 100% to age 100. I figure I can spend MORE than my budget sooner if things look good, but if things go south I wanted to know that I wouldn't have to take "drastic measures". Keep in mind, I only have about 10% discretionary spend in my budget so that made me feel I needed to be more cautious. If my discretionary were 30% or more of my budget I might have been ok with a result of "depletion at 87"

(Edited to add - I will have SSI but no pension)

[Cut-Throat]

Quote:

Originally Posted by Live And Learn There is no way I would have ever retired if FireCalc had my funds depleted by 87 ! I wanted 100% to age 100.

Yup, Me too! ....

But what is still amazing to me, is that when you are talking about Social Security, the "Take it at age 62 Crowd" usually cannot see past age 83 (The Break-even Point).

[Car-Guy]

Quote:

Originally Posted by Live And Learn There is no way I would have ever retired if FireCalc had my funds depleted by 87 ! I wanted 100% to age 100.

Me too and that "thinking" caused me to work a couple more years than I really needed to work. I have since re-calibrated my spend rate and I am now blowing that dough since I now realize I'll never even see 90. Maybe 85 and that's pushing it.

[Car-Guy]

Quote:

Originally Posted by Cut-Throat But what is still amazing to me, is that when you are talking about Social Security, the "Take it at age 62 Crowd" usually cannot see past age 83 (The Break-even Point).

Many do that because they just don't trust the government.