The Myth of Outliving your Retirement Savings - EBRI

[easysurfer]

I really don't think I'd live past 75. Not a crystal ball thing but at family genes. Oldest immediate family member lived only until early 70's.

Yet, at the same time, I see planning like I'll live until 100 as another form of insurance against the unexpected.

Probably won't happen, but just in case. Like good idea to have umbrella insurance.

 

[RunningBum]

When I die, I want to go peacefully, in my sleep, like my grandfather...

not yelling and screaming...

like the passengers on his bus.

 

[ERD50]

That article mentions retirees with only $29k in savings! Does anyone really deliberately retire with only 29k? Even with a pension that seems extreme. ...

Well, I know a married, retired couple and they each have a COLA pension in the $80,000 - $100,000 range. With an ~ $180,000 income stream, one can live pretty well w/o much of a cash buffer or portfolio.

I don't know what sort of portfolio they have, but from some comments they've made, I would not be surprised at all if it was very small. I was surprised at some comments they made about some things that they "would not be able to afford" once they retired.

My mom never had to hit her nest egg but she had a sizeable ss benefit and paid cash for cars and her spot at a retirement community.

If someone like your Mom bought that as the last car they'll need (or maybe they don't need a car at all), and paid for that retirement community before they retired, it sounds like if they were left with $29K going into retirement, and they'd be fine, right?

I've worked with actuaries for decades. I guess it's rubbed off.

That's the point, averages and medians are meaningful when you are looking at a large group. I see people keep making the mistake of over-stating how that applies to an individual in the group.

-ERD50

 

[Markola]

Worrying about outlasting your money is one of the reasons most here won't outlast their money. We've all done mathematical models like Firecalc, played with all the options, and are comfortable with the odds.



But two things in particular make me less concerned about running out of money in retirement: 1. I know I can live on a lot less per month than I am budgeting (will I like it? Hell no, but it won't be eating cat food), and 2. If something starts to shimmy, I'll know about it a long way away. It's not like I'll wake up one day and say "damn, I thought I had $3M here, now I only have $847."

+1. There is a lot of ways to put distance between you and cat food. We rank our budget from wants progressively to real needs. It’s obvious there aren’t that many unmanageable real needs, especially after we pay off the house in a few years. We’re planning to live well, travel and enjoy life. But if at a bare minimum our current double comma savings can simply bridge us to taking SS at age 70 + a paid off house + something left invested, we’re going to be “rich” in relative terms. If that fails somehow due to health catastrophe or something, oh well, we will live like other Americans, either average or median or whatever, and will figure out how to muddle through to the end.

 

[athena53]

Anecdotally, I see quite a few people retiring or planning to retire, with little or nothing saved. Years ago when our newspaper actually HAD a Financial section, someone wrote to the Retirement columnist and asked why he didn't give advice to people who felt "blessed to have $50,000 or $100,000 in retirement savings" instead of addressing the readers who had much more. The columnist's reply: "Keep working".

According to the SSA, 23% of married persons and 43% of unmarried persons rely on SS for more than 90% of their retirement income. Given that the average monthly SS benefit amount is about $1,400 this is a more dismal picture than the EBRI paints.

Someone else mentioned that many retirees probably don't run out of funds but find themselves forced to reduce spending as they age. In many ways I was blessed to be married to my second husband, who was 15 years older than I. I saw the extra expenses of living comfortably in your 70s- hearing aids, good dental care, decreased ability to work around the house and the yard (especially on ladders), and more comfortable travel (Business Class on long hauls, cars to and from airports, fewer trips on public transportation dragging suitcases and backpacks with us, hotels closer to the action).

Even if you don't outlive your savings, not being able to afford good hearing aids or watching your house fall down around you because you don't have the money to get it repaired is a dismal way to spend your final years.

But two things in particular make me less concerned about running out of money in retirement: 1. I know I can live on a lot less per month than I am budgeting (will I like it? Hell no, but it won't be eating cat food), and 2. If something starts to shimmy, I'll know about it a long way away. It's not like I'll wake up one day and say "damn, I thought I had $3M here, now I only have $847."

My feelings exactly. I have numerous large discretionary items I can change at will: funding the granddaughters' 529s, travel and charitable donations (although I would hesitate to reduce a church pledge once I made it, I could pledge less the next year). I could even file for SS earlier than planned- I'm 65 and collecting Survivor benefits and planning to wait on my own till age 70. Mid-course corrections are always possible.

 

[LARS]

Even if you don't outlive your savings, not being able to afford good hearing aids or watching your house fall down around you because you don't have the money to get it repaired is a dismal way to spend your final years.

And that is why I don't intend to get hearing aids or new glasses in my old age: if I can't hear or see the deterioration surrounding me is it really happening?

 

[golfnut]

I see alot of references to genes as a determining factor on how long one might live. However, I'm seeing more and more situations (sadly) where genes have been a poor indicator of longevity.

 

[RunningBum]

I see alot of references to genes as a determining factor on how long one might live. However, I'm seeing more and more situations (sadly) where genes have been a poor indicator of longevity.

Really? There are plenty of exceptions, but I think taking into account genes is probably more accurate than a generic "average person lives to 78 (or whatever)". Healthy eating and exercise can overcome bad genes sometimes. Bad habits can override good genes sometimes. Accidents are a wildcard. Bad luck happens and people who show every indication of living into their 90s with good genes and healthy living can die early. But aren't those more of an exception?

What is a good indicator if genes aren't, besides healthy living? I don't buy that it's all luck.

 

[golfnut]

Really? There are plenty of exceptions, but I think taking into account genes is probably more accurate than a generic "average person lives to 78 (or whatever)". Healthy eating and exercise can overcome bad genes sometimes. Bad habits can override good genes sometimes. Accidents are a wildcard. Bad luck happens and people who show every indication of living into their 90s with good genes and healthy living can die early. But aren't those more of an exception?

Genes/lifestyle might be the best indicator but as I mentioned previously, the older I get (62 now) I have seen the exceptions becoming more frequent - friends passing away in their late 50s/early 60s who seemly had the gene wild card on their side and they were not overweight party animals.

What is a good indicator if genes aren't, besides healthy living? I don't buy that it's all luck.

I did not say it was all luck but it's the ultimate indicator.

 

[SecondCor521]

Really? There are plenty of exceptions, but I think taking into account genes is probably more accurate than a generic "average person lives to 78 (or whatever)". Healthy eating and exercise can overcome bad genes sometimes. Bad habits can override good genes sometimes. Accidents are a wildcard. Bad luck happens and people who show every indication of living into their 90s with good genes and healthy living can die early. But aren't those more of an exception?

What is a good indicator if genes aren't, besides healthy living? I don't buy that it's all luck.

I know it's popular to look at one's immediate family's longevity to predict one's own, and I think RunningBum's perception above is the common wisdom these days.

But it's possible that the science says the common wisdom is wrong.

I recall reading somewhere a while back that only 7% of one's longevity can be attributed/predicted this way. That seemed surprisingly low, so I googled it again and found this, which says it's 6%:

https://www.sharecare.com/health/longevity/how-parents-lifespan-affect-lifespan

A little further down the Google results is this more scholarly-looking article from the NIH saying it's 25%:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4822264/

 

[RunningBum]

Interesting, but all a little too complex for me. If my parents die of something that there's a cure for in my lifetime, it's almost as if they died in a car accident rather than due to health problems.

I don't worry too much about genes anyway, since there's only so much I can do about it (except for a few things, like taking lutein because my dad has macular generation and my gene test shows that I have a slightly elevated risk). I only brought it up because I don't think anecdotal evidence of a few friends passing early is an argument against genetics, but I understand the personal perspective. I'm more focused on exercise and eating healthy (though I could do a lot better on the latter) to hopefully extend my time and quality of life.

I would probably agree that luck is the biggest factor, but healthy living and genetics are relevant rather than being a poor indicator. Maybe that's just semantics.

 

[Lawrencewendall]

After his heart attack, 52-year-old American Heart Association President, John Warner talked about the effects of heart disease on his family. He mentioned how both his father and his father’s father had heart bypass surgery in their 60s. He also lost his maternal grandfather and a great grandfather to heart disease.

https://news.heart.org/aha-president-stable-condition-heart-attack/

 

[ncbill]

After his heart attack, 52-year-old American Heart Association President, John Warner talked about the effects of heart disease on his family. He mentioned how both his father and his father’s father had heart bypass surgery in their 60s. He also lost his maternal grandfather and a great grandfather to heart disease.

https://news.heart.org/aha-president-stable-condition-heart-attack/

Prior to the 1980s, no male on either side of my family lived much past 60 before dying of some form of heart condition.

Even now those who make it past their early 70s have a poor quality of life.

Though most of them had prior bad habits (heavy drinkers and/or smokers)

 

[daylatedollarshort]

Most of these retirement articles make the assumption that the more retirees spend and the more stuff they buy the happier they will be, but that idea really isn't really supported by any actual happiness research, especially above and beyond a certain income level. Buying more and more stuff doesn't usually make minimalists and environmentalists any happier.

 

[aja8888]

Most of these retirement articles make the assumption that the more retirees spend and the more stuff they buy the happier they will be, but that idea really isn't really supported by any actual happiness research, especially above and beyond a certain income level. Buying more and more stuff doesn't usually make minimalists and environmentalists any happier.

No, but it sure helps the economy!

 

[Walt34]

Buying more and more stuff doesn't usually make minimalists and environmentalists any happier.

No, but it sure helps the economy!

And besides, it's just plain fun to blow that dough!

 

[joeea]

Does anyone really deliberately retire with only 29k?

I know some folks that retired with nothing but SS benefits.

I know lots of folks that had to retire with no choice in the matter and also had nothing.

 

[joeea]

how do I choose between a quick death at 65, vs. a lingering death at 95?

Why not choose the quick death at 95?

 

[Walt34]

Why not choose the quick death at 95?

That's my plan, to be shot and killed at the age of 95 by a 20-year-old jealous husband.

 

[NW-Bound]

Why not choose the quick death at 95?

With my luck, that would not be a choice given by the Grim Reaper.

That's my plan, to be shot and killed at the age of 95 by a 20-year-old jealous husband.

If at 95, one is still that physically attractive to an 18-year-old, he is so healthy he does not want to get killed.

There are ways to attract young and single women when one has money, without needing to be attractive. And by the way, a 95-year-old should be happy in the companionship of a 50-something. One must be really greedy (or rich) to want a 20-something.

 

[haha]

There are ways to attract young and single women when one has money, without needing to be attractive.

 

[Human]

I agree averages and (even better) medians are more useful than anecdote, but I think most planning should look at the distribution tails, not averages or medians.

If you plan for a median life span, half the planners will live longer. Far better to look at the tails and plan for something that feels 'comfortable'. What age do 10% or 5% or 1% make it to? That at least gives some feel for how far out from average or median you want to go. But the single number tells you nothing about the distribution.

-ERD50

+1

 

[Music Lover]

That article mentions retirees with only $29k in savings! Does anyone really deliberately retire with only 29k? Even with a pension that seems extreme.

My mom never had to hit her nest egg but she had a sizeable ss benefit and paid cash for cars and her spot at a retirement community.

I know a few people who retired with $0 savings...but they have a COLA pension that covers their expenses.

I retired with just 3 years of expense money but also have a COLA pension that although is modest, it exceeds my monthly expenses. I have no worries and if I had to do it over again, would do the same thing.

Don't forget that some of those people with little or no savings may also have a few hundred $$ of home equity that they can cash in if needed. A few hundred thousand $$ from the proceeds of a house can easily cover a couple decades of of years of rent and expenses.

 

[marko]

That's my plan, to be shot and killed at the age of 95 by a 20-year-old jealous husband.

....and having the last check that I wrote for $100 bounce!

 

[UnrealizedPotential]

That's what I had to do was sell my condo , otherwise no way would I have enough to walk away from my job. Selling my condo made all the difference, plus I was just plain ready to leave . The combination of selling my condo and moving to a cheaper area to live made it possible. It's been almost two years now and it just keeps getting better.