Do you know how long your retirement savings will continue to last, which is based on your inflation-adjusted withdrawals and retirement savings?
How Long Will My Retirement Savings Last?
Retirement can seem frightening regarding financial matters. When people retire, they are totally dependent on their savings and Social Security to cover them for the rest of their lives.
One thing a person is thinking about at retirement age is if he or she put away enough money to see it last, the annual withdrawal rate it’ll support. Moreover, if you use our calculator, you will have more clarity on comparing your savings with a 30-year retirement.
Will you outlive your retirement savings
Today’s life expectancy isn’t what it was like some years ago. Now, if a man reaches the age of 63, they are likely to live until the age of 84.3 years. If a woman lives to be 65 years old, it’s probable that they will live until 86.6 years of age. These statistics are according to the Social Security Administration. Moreover, one out of four people that are 65 years of age will live older than 90 years of age and one out of ten will live past the age of 95.
Of course, wanting to live a long, healthy life is a positive thinking, as some would say. For some of those who are retired, it can be quite challenging. Moreover, the recent Allianz study states that 60% baby boomers said that they are very concerned about outliving their savings than dying.
Overall, an individual that’s hoping to die before their retirement runs out is quite sad. The most positive approach is to make some calculations to see whether or not your savings will last for 30 years. (Keep in mind that there’s a possibility that you will live longer; 30 years is an average.)
Moreover, here’s a calculator that helps determine whether or not your savings will last.
The Uncertainties of Your Retirement Savings
The estimates you saw prior are just that; estimates. These are not guarantees at all. The odds of your spending level can change; it can be a significant change as well. It depends on things such as the current financial market trends and the rise and fall of inflation. This is why you need to be aware of what you spend and not be flippant about it.
It’s wise to re-evaluate you’re your current situation by observing your current balance in savings and how much you are planning to spend (and possibly when do you think you’ll retire). Moreover, you can make adjustments regarding how much you withdraw if need be.
If the current market trends are not in your favor, it’s best to lower your spending. On the other hand, if the market is strong, you have the potential to be flexible with your money. As your money grows, don’t miss out on the opportunity to enjoy yourself; you don’t want to live in regret toward the end of your life.
Remember: Market conditions can change – and impact your retirement
Because there are so many uncertainties of what your retirement savings will be such as the performance of the market, your lifespan, what your expenses will look like, it’s wise to put your money into an annuity (whether immediate or something that accrues overtime). That way, no matter how the market looks or how long you think you’ll live, you’ll have something to always fall back on.
Even though annuities have their pros, they also have disadvantages too. One of the biggest downfalls is that you’ll lose the money you invested overtime for a guaranteed payment. Even though you may have an idea of income that’s appealing because you have the potential to outlive it, it’s best to weigh the balance of pros and cons of an annuity before deciding to get one.
Unless someone has the mind of a genius to tell you how long you have to live, it’s impossible to know how much retirement money you’ll have, the probability of you spending your retirement money too soon, or having an abundance of cash that’s over your lifespan. Furthermore, if you use the calculator recommended above and adjust your savings and withdrawals accordingly, you will have a stronger sense of how much income you need, along with the comfort you seek.