The Truth About Running Out Of Money In Retirement

Technically, if you’re collecting Social Security and are lucky enough to also be collecting a pension in retirement, technically you won’t be running out of money in your retirement. Those benefits are guaranteed to your death. So, let’s put that first scare tactic to bed, shall we? What the financial advisors are scaring us about is running out of our savings in retirement. That’s quite a difference. If you’re able to make it on your Social Security monthly benefit plus/and/or a pension, you will probably fare somewhat well in your retirement years.

DH and I have been meeting with our estate-planning attorney/financial advisor and we ran our current financial holdings. We have a paid-for home, no car loans, no credit card debt and a smallish RV, low-interest loan. Based on our savings, investments, assets, equity, Social Security and pension income and our low expenses (estimated $3100 per month in two years when we officially fully retire) we will have a cumulative lifetime income of $1,242,597 which potentially will last us for 24 years.

Technically, we may have a potential shortfall year in 2043. I would be 93 years of age but unfortunately, the program projects I’ll be dead at 90 years of age. That means my money will outlast me by three years. Since DH is younger than I am, he’ll experience a savings shortfall when he is 86 years old. He’s estimated to perish in 2047 at 90 years of age also. DH will be living, according to the financial calculations, without a savings account for 4 years. By then, both of us might be living in a Medicaid-sponsored nursing facility or with our children. But then again, DH and I do very nicely living solely on our Social Security and pension benefits so I don’t see our final days being anything like what a computer generates.

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My dad died at 92, still living in his home with a $600 a week caregiver. He only went into a medical facility the last 3 weeks of his life. My mother died young at 59 due to a rare, incurable cancer. DH’s father died in his mid-eighties, also having the same heart conditions DH has currently. His mom, however, is 89 going on 90 and in tip top shape.

Since no one can project when they will die, despite computer-generated analysis, longevity in retirement is a crap shoot. You aim for the moon and hope for the stars. If DH and I die on time, we won’t run out of savings in our retirement. If we live longer, hopefully our kids will pick up the slack. If not, it’s off to a Medicaid-sponsored facility. Geeze, I hope they at least visit us from time to time.

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When  we are born in to this world, there is much fanfare and celebrations. Our parents have parties and baby showers and gender-identity parties. They hand out cigars and get pats on their backs. There’s food and wine and merriment. When we are ready to leave this very same world we were born into there is pain and health issues and biased age discrimination and misery. I have often wondered why our life span must be so. Why do we come in like a bang and go out like a whimper? Shouldn’t we celebrate the fact that we are alive till our very last day on this planet? The masses might not but I plan to.

I plan to party and celebrate to my last dying breadth.

Live well, my friend. And prosper. Live well and prosper.

4 comments

  1. The one worry about SS and pensions is when the cost of living relies on both of the spouses getting the benefits. If one spouse dies, the other either keeps their own, or selects the spouse, but either way, there is a decrease. That worries me about relying on SS. If our combined SS is $4,000 a month and we spend $3500, that well and good, but when one of us dies, it may drops for easy calculations, $2,000, but the $3.500 a month living costs don’t drop at that same 50% rate, maybe food, prescriptions, clothing and other consumables go down, but not housing costs, transportation, etc. .I might be cynical, but I’m trying to plan a retirement for each of us that can survive either of us passing on too much before the other. Key word-trying.

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    • Sam, you bring up a very good point. The only thing that would drop after one spouse dies would be the Social Security. The rest stays the same: investments, annuities, savings account, bonds, stocks etc. My husband gets a pension also and we chose the spousal benefit. Should hubby pass, I would still get his pension but at an agreed upon lower rate, which turned out to be $100 less. Also, should my husband pass before me, there is no way I could live in our home alone. I would sell, move to a less expensive area and abode and pocket the difference.
      Spouses should sit down together and plan out what to do should one pass before the other. If I should pass first, my husband could live very happily forever in this home. I couldn’t. It’s too big for me but perfect for him. He could handle it. I couldn’t. Also, my husband is a spender. I’m not. He spends a lot of money on hobbies, tooling around (always buying a new tool or contraption). I don’t. Plus we would go from 2 cars to one car. I’d also trade in our RV for a driveable model. I couldn’t tow our current trailer but I could still drive. Or no more RV and I’d fly for future vacations.
      Hubby and I also have life insurance on each other. That money, should one pass before the other, is made 100% tax free and should also be part of a couple’s retirement strategy. Lastly, there should always be one account, either party or executor could freely access holding at least a minimum of $15,000 to pay funeral costs and/or settle any debts. The surviving spouse should not have to fret about money if and when one partner passes before the other.
      Thank you so much for bringing up a very valuable aspect of retirement planning.

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  2. No life insurance here. Military health insurance (can we say socialized medicine?), No financial planner, but we do have a will.
    Running the numbers to see how much we will earn with SS in the next 25 years. Wow! Over a million dollars. Not sure it is going to happen, but one can hope.
    I have run numbers in many ways. Unless the country completely collapses, we should be fine well into our 100s. If he dies first, I will sell and move to my daughter’s. If I go first, he will stay in place and keep rolling in dough–lol. We did not sign me up for his pension- choosing to take the money now.
    Our life is not expensive, really it isn’t. No debt, at all. All money has a purpose. 🙂 When the travel fund is ready, we go! Right now the house fund is looking for a fridge on Black Friday. The car fund is building nicely for a new pick up in four years- just before that election. The present fund is currently being raided. It will go to zero and start again.
    Still, I am a bit concerned what will happen when the left takes over. I guess stashing money into our house will be better then the cash they can use. We can live with less, much less. We need money for taxes, food, utilities and not much else.
    I am no longer interested in worrying about it. Retirement ebbs and flows.

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    • Janette, the left will be targeting the rich so we’ll be fine. 😦 Not finding that statement so funny, but nonetheless, true.
      You have way more funds set up than we do. Eventually we will be going down to one car but it will have to be a vehicle that can tow (the RV). That should be fun.
      Good luck with that fridge buying on Black Friday. Perfect planning!
      Always make sure you have enough money to pay those taxes. Should we ever miss a property tax payment, it might not be so pretty! We really don’t own anything in this world, do we?
      Thanks for your comment.

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