You Can Outlive Your Money
Key take-aways:
- Planning the first few years of retirement might be easy. What will the last five years (or ten years) look like?
- You CAN outlive your money – the risk is real. Today, retirees may live into their 90s or even 100, increasing the chance of outliving savings.
- Retirement income can shrink — loss of a pension and one Social Security check after a spouse passes can drastically change financial security.
- Living costs keep rising — home expenses and healthcare can erode savings even when there is no mortgage. It’s critical to know your sources of income, and gauge (as best as possible) what expenses may look like in the future.
- Work with your financial planner, to better know your numbers!
You Can Outlive Your Money – Links
Catch all our Mullooly Asset videos here
Subscribe to the Mullooly Asset YouTube Channel
Watch this episode (“You Can Outlive Your Money”) on our YouTube Channel
You Can Outlive Your Money – Transcript
You can outlive your money.
We’re seeing lots of stories and advice being given both online and offline, that basically goes along the lines of “hey, you’ve done a great job preparing for retirement. You can actually spend more in retirement than you might think.”
We’re also seeing advice from folks in our industry, on social media saying, “you know, it might be better to gift money to your kids now when they need it, rather than have them inherit that money decades from now.”
There is * some * merit to that. But I’ll also say that I heard the very same claims made in the 1980s, in the 1990s and just about every decade since then.
There is a chance that people can outlive their money.
I want to share with you a story I heard recently about a couple who retired from New Jersey.
They moved to Florida when they turned 55. This was back in 1982. So we’re going way back in the time machine for this one.
They sold their place in New Jersey, because at the time, “New Jersey was just getting too expensive to live,” anymore.
And, they bought a condo in Florida.
It’s pretty funny to hear people say New Jersey was “too expensive to live in 1982,” 43 years ago!
So they had a place in Florida. They bought a condo, they paid cash for it. So there was no mortgage. They had a good amount in savings. He got a small pension. They eventually got two social security checks.
They seemed to be in pretty good shape.
They did all of this, again, at age 55 in 1982.
So about 15 years later in 1997, the husband gets ill and then he passes away.
So his pension check stops.
And the social security checks are now one check a month, not two.
Things are changing.
Even though their place was paid off, there has been no mortgage in the last 20 years, the cost to live there has just skyrocketed.
No one ever dreamed that the property taxes, the property insurance on a place like that, the condo association fees, would be what they are today.
And the surviving spouse is still hanging in there.
She’s 98 years old now.
But the fact of the matter is she’s out of money.
Now, the kids are chipping in, having to pay for repairs, for maintenance, for large doctor bills, you name it.
She is fortunate to have some helpful kids, some helpful family members who are helping her out.
But look, when we talk about planning, we talk about “what the math might look like” if you live to age 100 or a married couple, both of them, living to age 100.
It’s quite possible that – in 2025 and beyond – that one spouse – and possibly both spouses may live into their late nineties.
What is that scenario going to look like for you?
