Worried About Running out of Money in Your So-Called “Golden” Years? You Are Hardly Alone | Santa Barbara Estate Planning & Elder Law

Americans are living longer than ever before. That’s great news, but it has a downside—the possibility of outliving our life savings. According to the Social Security Administration, a 65-year-old man can expect to live to age 84, on average, while a woman of the same age may make it closer to age 87. So if you retire at the age of 62, your nest egg may have to last for at least 20 years. Sure, Social Security will provide an income stream, but the amount is not enough for most retirees to live comfortably.

Little wonder, then, that according to a survey by the Transamerica Center for Retirement Studies, the most frequently cited retirement concern among Americans is outliving their savings and investments. In the survey, 44% or respondents across all ages expressed this fear, as compared to 41% of retirees. In addition, 47% of retirees believed they had not amassed a nest egg large enough to make it through retirement. An article in Kiplinger addressed this issue and offered advice on how to avoid going broke in retirement. Here are some of the highlights.

Don’t abandon stocks. 

Yes, stocks can be risky. In January, Standard & Poor’s 500-stock index was a roller coaster ride, with frightening drops and exhilarating climbs, but it the end it wound up down 5% for the month. Meanwhile, “expert” opinions online and elsewhere seem just as inconsistent. One investment guru claims the market is headed for imminent, unprecedented collapse, while another predicts record highs for years to come. Market volatility and commentary like this leads many retirees to abandon stocks. Unfortunately, without stocks it is very difficult to get the growth you need to live comfortably for 20 years or more after retirement.

What should you do? While there is no universal formula, many advisors recommend moving to 60% stocks as you approach retirement, trimming back to 40% stocks in early retirement, and holding just 20% of your portfolio in stocks later in retirement.

We can give you recommendations for financial planners to discuss this matter with. Give Santa Barbara Estate Planning and Elder a call at (805)946-1550.