What If You Run Out of Money?

[scrabbler1]

While I've written about how my chance of running out of money is pretty much zero, I am a little concerned about my dad. He is 87 and has been retired for 24 years. He has the standard three-legged stool consisting of a small pension, SS, and personal savings being managed by Ameriprise. (Actually, only half of it is subject to the AUM fee, the other half is an annuity.)


He is reasonably healthy although he has had some health issues the last few years. He lives in the same house he has lived in since 1964, the house my brother and I were raised in, and the house my mom lived in before she passed away in 1995 at age 59. I know he doesn't want to have to move should the house become too costly to maintain (i.e. property taxes on LI are high).


His personal savings are down about 1/3 in the last 10 years but they are still pretty solid (about $170k). Whenever he has to spend some money, he jokes to me and my brother, "there goes some more of your inheritance." It's not like either of us are in need of it, as I am in fine shape and my (younger) brother is wealthier than I am, running his own successful business.


He never remarried after my mom's passing but he did have a ladyfriend for 18 years until she passed away in 2014. He doesn't seem interested in trying to find another woman. He still lives comfortably, not extravagantly. If he needed my brother and me to help him out financially, we could. He is far from that point.

 

[NW-Bound]

There are too many random hazards in life. People planning for their retirement spend all the time thinking about the financial aspect which is not a bad thing, but there are so many other factors that we simply cannot predict, have no control over, and cannot prevent.

 

[NW-Bound]

Some statistical numbers for us to mull over.

1) The chance of a person getting cancer is 1/3 in his/her lifetime.
2) The chance of a person dying from cancer is 1/5.
3) More than 1/3 of the cancer cases (36%) happen to people over 75.
4) Over 1/2 of the cancer cases (53%) happen to people between 50-74.

So, people older than 50 get 89% of all cancer cases. Nobody is immune.

I think the risk here is higher than people like to think. And then, one has to remember about various other diseases too. It's bleak.

 

[Moemg]

There are too many random hazards in life. People planning for their retirement spend all the time thinking about the financial aspect which is not a bad thing, but there are so many other factors that we simply cannot predict, have no control over, and cannot prevent.

Plus I see so many couples planning on two SS's when a lot of couples lose a spouse early in retirement.

 

[NW-Bound]

Yes, my parents are an example. They elected to not have Joint and Survivor option for his pension, even when he was already diagnosed with kidney failure when he retired.

I only learned of this after he died, and was flabbergasted. They had made many good decisions in life in raising us, but committed the worst blunder regarding their retirement income. My mother explained that they felt that they needed more money to enjoy life together. But, but, but they had a rental property that they left sit vacant for years because they were tired of tenant's problem, and that should have been sold during the housing craze period.

Yes, there are things that one cannot prevent, but then there are blunders.

By the way, my mother is doing fine financially now, when she finally sold that rental property.

PS. It could also be their way of being in denial that my father's life would be severely shortened with such a serious disease.

 

[audreyh1]

Yes, my parents are an example. They elected to not have Joint and Survivor option for his pension, even when he was already diagnosed with kidney failure when he retired.

I only learned of this after he died, and was flabbergasted. They had made many good decisions in life in raising us, but committed the worst blunder regarding their retirement income. My mother explained that they felt that they needed more money to enjoy life together. But, but, but they had a rental property that they left sit vacant for years because they were tired of tenant's problem, and that should have been sold during the housing craze period.

Yes, there are things that one cannot prevent, but then there are blunders.

By the way, my mother is doing fine financially now, when she finally sold that rental property.

PS. It could also be their way of being in denial that my father's life would be severely shortened with such a serious disease.

Wow - yes that is mind blowing. Glad you mother is doing fine financially.

 

[joeea]

I have posted before about a study that shows there is a strong correlation between parents' and offsprings' heights, but zilch between their longevity.

Even identical twins do not have similar longevity.

Plenty of studies come to exactly the opposite conclusions.

 

[NW-Bound]

The study I talked about earlier was from a research in Germany. But earlier in this year 2018, another study came out.

... A research team, which included scientists at Columbia University, Harvard, MIT and the New York Genome Center downloaded 86 million public family tree profiles from the website Geni.com, which is one of the largest collaborative genealogy websites in the world.

Once the data was cleaned up, the team had 5.3 million independent family trees to work with. Interestingly, the largest family tree included 11 generations and contained a whopping 13 million individuals! Using this data, the scientists looked at the role of genes in longevity and how families spread out geographically over time.

... the genetic contribution to longevity was lower than previously thought, “about 16%, which is considerably smaller than the value generally used in the literature of 25%.”

... this difference is attributed to the possibility that previous studies have over estimated the heritability of longevity.

Note that the previously accepted number of 25% is already lower than what most laymen thought.

For details, see: https://www.theatlantic.com/science...-pedigrees-myheritage/554441/?utm_source=feed

 

[NW-Bound]

Wow - yes that is mind blowing. Glad you mother is doing fine financially.

My mother told me of a couple she knew. The husband was a medical doctor, who worked for the state and retired early. He was in perfect health, so perhaps thought that he was invincible and took his pension with no survivor option.

Only 2 or 3 years after his retirement, when he was still in his early 60s, he died, leaving his wife with no pension. Cause of death: fungus growing in his brain.

 

[marko]

I have posted before about a study that shows there is a strong correlation between parents' and offsprings' heights, but zilch between their longevity.

Even identical twins do not have similar longevity.

Any studies on "too mean to die"?
That would be my family.
My great-grandfather was 104 and died when he fell trying to climb over a 4 foot fence.

 

[street]

I know of a family that had 8 kids and both parents died one was 96 and the other just short of 100. Out of the 8 children 6 have died in their 70's and one just turned 90 and one in his 80's.

 

[joeea]

The study I talked about earlier was from a research in Germany. But earlier in this year 2018, another study came out.



Note that the previously accepted number of 25% is already lower than what most laymen thought.

For details, see: https://www.theatlantic.com/science...-pedigrees-myheritage/554441/?utm_source=feed

So not exactly zilch, right?
And as I said, it's not hard to find studies reaching far different conclusions.

 

[NW-Bound]

OK, "zilch" is too strong a word. I should have said "little correlation".

Anyway, this 2018 article in Science is not easily accessible. However, one can search the Web using the terms "longevity 16%", and find many references to this study.

For example,

Erlich says that “good” genes might extend a person’s life by an average of five years. Some environmental factors make a much bigger impact on longevity; smoking, for instance, can subtract ten years.

 

[NW-Bound]

I know of a family that had 8 kids and both parents died one was 96 and the other just short of 100. Out of the 8 children 6 have died in their 70's and one just turned 90 and one in his 80's.

My father came from a big family. He had 8 older siblings, and one younger. Nearly all of them lived significantly longer than he did, except the ones who died of accidents.

And that despite them being mostly poor, and did not have access to medical care like my father did. If it were not for modern medicine, my father would die in his mid-60s.

PS. My father's parents died of dysentery in their 50s, during WWII. So their genetic factor is unknown, other than the lack of resistance to certain bacterias that did not kill others during this war period.

 

[Huston55]

The difference is we use mainly matching strategies for investing and don't rely on stock market returns or historical probabilities, and instead use the ideas as written up here - https://www.bogleheads.org/wiki/Matching_strategy, "The process of matching strategies allows an investor planning for retirement to meet specific financial targets with near certainty."

Do you mean that you use matching strategies for essential (however you define them) expenses, and a diversified investment portfolio for discretionary expenses?

 

[kcowan]

Being the youngest child of the youngest child of a family of five, I have seen a cousin die at 96, although the last 6 years were in a home. Another is in a home now at 82. One died at 52, another at 74. I think it is a crap shoot. My planning would have one of us live to 100. But I am thinking that we need to be more aggressive in spending, maybe adjusting the die broke date to 90.

It does not take much money to survive here in Canada. Having money just leads to upgraded LTC facilities.

 

[Souschef]

It is really a crap shoot. My wife died at 67, My ex is 81 My dad died at 92, my mom at 102.
My present wife's father in law outlived all 3 of his sons.

 

[Chuckanut]

I remember reading an article in the WSJ that looked at the increase in average age over the past 30-40 years. It wasn't due to more and more people living to a very old age. Rather, more people who would have died in the late 60's and 70's were now living into their 80's thanks to medical science.

As I understood, it one's chances of living into the 90's and beyond is still very small, but one's chances of getting well into the 80's has gone up considerably.

 

[Crabby Mike]

I remember reading an article in the WSJ that looked at the increase in average age over the past 30-40 years. It wasn't due to more and more people living to a very old age. Rather, more people who would have died in the late 60's and 70's were now living into their 80's thanks to medical science.

As I understood, it one's chances of living into the 90's and beyond is still very small, but one's chances of getting well into the 80's has gone up considerably.

Just remember, when planning retirement for two, the odds that at least one of you makes it to 90+ is much higher.

 

[Dtail]

I remember reading an article in the WSJ that looked at the increase in average age over the past 30-40 years. It wasn't due to more and more people living to a very old age. Rather, more people who would have died in the late 60's and 70's were now living into their 80's thanks to medical science.

As I understood, it one's chances of living into the 90's and beyond is still very small, but one's chances of getting well into the 80's has gone up considerably.

+1

 

[ncbill]

I know of a family that had 8 kids and both parents died one was 96 and the other just short of 100. Out of the 8 children 6 have died in their 70's and one just turned 90 and one in his 80's.

Maternal grandparents died just shy of 95.

Both were still living in their 2-bedroom cottage at a local CCRC until a few weeks before death.

Of their 3 kids, my mom died in her early 60s, & it now looks like another will pass in their early 70s.

 

[daylatedollarshort]

Do you mean that you use matching strategies for essential (however you define them) expenses, and a diversified investment portfolio for discretionary expenses?

Matching strategies cover all our planned retirement expenses. We don't have a high percent of investments in stocks.

 

[Seagirt]

This topic raises all sorts of 'you can't take it with you' issues for me. Also the whole Ebeneezer Scrooge vs Bob Crachit thing. I think it's good to have some security, but you can't guarantee security, because you can't control everything. I think the best security is having people who care about you.

 

[NW-Bound]

...I think the best security is having people who care about you.

Wow! You have hit the nail on the head.

The other day, I watched the interview of some homeless people on Youtube. Not all of the down-and-out people are on drugs or mentally unstable. There was this guy who said that it was difficult for him to get hired when he had no address to put on an application, or a place to clean himself up to make himself presentable. He added that if he had a relative for support, it would not be so hard.

At the end of life when you are really old and disabled, having no one to look after your well being makes things more difficult even when you have money.

 

[RobbieB]

Yeah, that's why I got married again -