Managing the Risk of Outliving Your Money

Justin Lopez

Justin Lopez July 25th, 2022

“What is your greatest retirement fear?”

If you ask some pre-retirees this question, “outliving my money” may be one of the top answers. In fact, 42% of workers say they fear outliving their savings and investments.1

Retirees face greater “longevity risk” today.

The Census Bureau says that Americans typically retire around age 63 for women and 65 for men. Social Security projects that today’s 63-year-olds will live into their mid-eighties, on average. This is a mean life expectancy, so while some of these seniors may pass away earlier, others may live past 90 or 100.2,3

If your retirement lasts 20, 30, or even 40 years, how well do you think your retirement savings will hold up? What financial steps could you take in your retirement to try and prevent those savings from eroding? As you think ahead, consider the following possibilities and realities.

How will Social Security work in the future?

For decades, Social Security took in more dollars per year than it paid out. That ongoing surplus – also known as the Social Security Trust Fund – may face funding challenges as early as 2034. Congress may act to address this financing issue before then, but the worry is that future retirees could get slightly less back from Social Security than they put in. It’s critical that pre-retirees estimate the amount of Social Security benefits they are expected to generate in the future.4

Preparing for out-of-pocket health care costs

You can enroll in Medicare at age 65, but how do you handle the premiums for private health insurance if you retire before then? Striving to work until you are eligible for Medicare makes economic sense and so does setting aside money to pay for health care costs. A healthy couple retiring at age 65 can expect to pay nearly $208,000 in lifetime out-of-pocket healthcare expenses, even if they have additional coverage such as Medicare Part D, Medigap, and dental insurance.5

Luck is not a plan, and hope is not a strategy.

Those who are retiring unaware of these factors may risk outliving their money. Creating a strategy may help you better prepare for retirement.

1TransamericaCenter.org, 2021
2TheBalance.com, 2021
3Social Security Administration, 2021
4Kiplinger.com, 2021
5HealthView Services, 2021

Read More By Justin Lopez, AIF®

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

Join The Conversation

We live and work near you

Abingdon , VA

955 West Main St. Abingdon, VA 24210

(276) 628-5910

Boston, MA

One Kelley Square #208, Worcester, MA 01610

(508) 719-8510

Richmond, VA

5309 Commonwealth Centre Parkway - #109, Midlothian, VA 23112

(276) 628-5910

Rockville, MD

11400 Rockville Pike #500, Rockville, MD 20852

(301) 984-4461

Charlottesville, VA

26 Garrett St. - A, Charlottesville, VA 22902

(434) 226-2651

Huntington, WV

218 13th St. Huntington, WV 25701

(304) 697-7083