Are you in danger for Outliving Your Retirement Money?

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Can undervaluing your longevity mean you?ll use up all your retirement cash?

At age sixty five, the typical life expectancy is eighty one yrs for a man and 84.8 yrs for a girl. At the age of seventy five, the average life span is eighty five.5 years for a man and 87.6 years for a woman.1 With recent improvements in medical science, it?s not a stretch to think that you could live to be 100. In fact, the U.S. Census Bureau projects that by 2050, there will be nearly 1 million centenarians.

Nobody wants to die quicker, so that is excellent information. The problem: In case your retirement plan doesn?t recognize the chances of a long retirement, you then might potentially outlive your retirement money.

Consider the following hypothetical example. Assume you?re 64 yrs old and earn $60,000 per year. You plan to retire next year at age 65. You?ve gathered $1,000,000 in retirement money, which you think will return a hypothetical six percent per year throughout your retirement. And, you have a $60,000 yearly retirement need (excluding Social Security). In case you have a 15-year retirement from ages sixty-five to eighty, you?ll have no deficiency in retirement money; actually, you will end up with nearly $696,000 to pass on to your heirs. On the other hand, in case you have a 30-year retirement from ages 65 to ninety five, you?ll run out of money at age 88.3 The table below shows. Obviously, this example above is theoretical and for illustrative functions only. It is not meant to signify the efficiency of any specific product.

Do you want to run out of retirement money?

 

Age Savings Retirement savings required for annual living expense
64 $1,000,000.00 $0.00
64 $1,059,999.94 $0.00
66 $1,058,028.28 $61,860.00
67 $1,053,905.60 $63,777.66
68 $1,047,439.82 $65,754.77
69 $1,038,425.39 $67,793.17
70 $1,026,642.42 $69,894.76
71 $1,011,855.72 $72,061.50
72 $993,813.88 $74,295.41
73 $972,248.18 $76,598.57
74 $946,871.51 $78,973.12
75 $917,377.18 $81,421.29
76 $883,437.69 $83,945.35
77 $844,703.39 $86,547.66
78 $800,801.08 $89,230.64
79 $751,332.50 $91,996.79
80 $695,872.80 $94,848.69
81 $633,968.79 $97,789.00
82 $565,137.20 $100,820.46
83 $488,862.75 $103,945.90
84 $404,596.18 $107,168.22
85 $311,752.06 $110,490.44
86 $209,706.59 $113,915.65
87 $97,795.12 $117,447.03

Source: Burling Bank. Assumes $1,000,000 in retirement savings has already been accumulated; another $60,000 is added. The money grows at a hypothetical 6 percent pear year; $60,000 (in today?s dollars) in withdrawn each year. This example above is hypothetical and for illustrative purposes only. It is not meant to represent performance of any particular product