Run Out of Retirement Money

Running out of money is a big fear for many retirees. And unfortunately, depleting your nest egg in retirement is a real risk. Half of all Americans over the age of 65 who live alone don’t have enough financial assets to cover their basic needs. However, if you think you might run out of retirement money, you can still turn things around. There are financial moves you can make to put yourself in a better position.

But first, you need to figure out if you’re at risk of spending down your nest egg. Here are 3 signs you could run out of retirement money and need to make changes. 

Higher Than Expected Healthcare Costs 

Many retirees aren’t financially prepared for the high healthcare costs they’ll face during their golden years. A couple can expect to spend $285,000 or more on basic healthcare expenses throughout their retirement. If you end up needing nursing home care, that figure can climb even higher. The US Department of Health estimates there’s a nearly 70% chance the average 65-year-old will need long-term care in their lifetime. 

If your healthcare costs are higher than you anticipated, there are things you can do to reduce your medical spending so you don’t run out of retirement money. One option is to purchase long-term care insurance to prepare for nursing home costs. There are no specific age requirements for long-term care insurance. But premiums do get higher as you age and you may be denied if you have health problems. So it’s in your best interest to sign up as early as possible.

Finding the best Medicare plan for you can also cut your healthcare costs. A Medicare insurance agent can help you go over your options and find a plan with manageable out-of-pocket costs. Your former employer may even offer supplemental health benefits to retired employees, which is something to look into. 

Some retirees choose to relocate to another country where healthcare costs are lower or engage in medical tourism when they need a procedure. However, there are risks to this approach, such as language barriers and differing medical standards in other countries. So do your research and proceed with caution. 

Longer Lifespan

If you have a family history of health issues, you may have planned for a short retirement. But thanks to advances in science and medicine, many retirees are living longer than ever. One in four 65-year-olds can expect to live past age 90. One in ten seniors will even make it past the age of 95. 

If you’re living longer than you expected to, you could run out of retirement money. But if you tighten up your budget and spend frugally, you can stretch your savings. Downsizing to a smaller house, moving in with one of your children, or getting a roommate can help reduce your housing costs.

The Low Income Home Energy Assistance Program can assist you with energy costs. You may be eligible for Meals on Wheels and property tax exemptions for older, low-income homeowners. Taking advantage of these programs and watching your pennies can make your nest egg last through a longer retirement. You can even get a part-time job to cover a portion of your expenses and take some pressure off your nest egg. 

Dwindling Investment Account

Because the stock market has been doing so well, most seniors have seen their nest eggs stay the same or grow in retirement. Even though they’re withdrawing money from their investment accounts, their wealth is still increasing due to high returns.

If your nest egg is dwindling in this bull market, it’s a sign that you could run out of retirement money in the future. Your assets may be invested too conservatively or you could be overspending. It may be worth sitting down with a financial advisor to go over your finances to make sure you’re in a good position. 

Even if you’ve saved diligently your whole life, it’s still possible to run out of retirement money. Rising healthcare, housing, and food costs can deplete your savings quickly. But if you notice the signs that your nest egg is dwindling early, you can adjust your financial plans and try to get things back on track. 

Read More 

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