Experts Warn: Outliving Your Savings Risks
Experts Warn: Outliving Your Savings Risks
Many people dream of a comfortable retirement, but one big worry looms over many retirees: what if you live longer than your money lasts? This is called “longevity risk,” and it’s a real concern. Experts are sounding the alarm because running out of savings can lead to serious financial stress in your later years.
Why is this such a problem? Most retirement plans rely on withdrawing from savings or investments like 401(k)s or IRAs. But these accounts aren’t guaranteed to last forever, especially if you live well into your 80s, 90s, or beyond. Market ups and downs can shrink your nest egg faster than expected. Plus, unexpected expenses like medical bills can drain funds quickly.
So how do you protect yourself?
One powerful tool experts recommend is an annuity. An annuity turns a lump sum of money into a steady stream of income that lasts for life—no matter how long you live. This means no more guessing whether your savings will run out because the payments keep coming as long as you’re alive.
Annuities also help shield you from market swings since some types guarantee your principal while still offering growth potential. They often come with options like income riders that increase payouts if you delay withdrawals or joint survivor benefits so payments continue for your spouse after you’re gone.
But annuities aren’t perfect and require careful consideration. Many seniors make mistakes by not fully understanding contract details, which can lead to hidden fees or losing important benefits like spousal continuation rights. Taking out too much money early on can also reduce future guaranteed income and penalties may apply.
Besides annuities, experts suggest saving aggressively throughout life—aiming for multiple times your annual salary by the time you’re in your 50s and 60s—to build enough wealth to support decades of retirement living comfortably.
Still, nearly half of Americans worry they might outlive their savings despite these warnings and strategies being available today.
The key takeaway? Planning smartly with tools designed for longevity protection—and understanding them well—is essential to avoid financial hardship late in life when earning more isn’t an option anymore but expenses often rise instead.
