Will Your Retirements Savings Run Out?

One of the biggest fears most people have is outliving their money. This fear is further magnified when people are not saving enough and also living longer. It is estimated that Americans blow $1.7 trillion in retirement savings every year. Instead of putting money into a retirement account, we are more apt to ‘live for today’.  The secret is to do both – enjoy your life now but also save for retirement. Would you rather have $100 today or $130 in 12 months? Taking the $130 in 12 months is equivalent to putting money away in an investment and having it grow.

The real beauty of having it invested is that your money grows and you do not have to do anything other than have the discipline to save and invest it. Some people might fear that investing is very risky business and they do not want to lose their hard-earned income. Fortunately, there are risk free investments paying 3 to 6% annually in returns.  We also recommend tactically managed investments that are designed to get good returns over a 3 to 5 year period and avoid the large losses that were experienced by investors as recently as 2008.

Once you have saved, the next challenge is how to spend those savings in retirement. The last thing you want to do is run out of money. A survey of 810 people was conducted in March of people were over 40 and had more than $100,000 in their retirement accounts. Surprisingly, 9 percent of these people felt you could take out 15-24 percent of your money each year!   Even with a good return on your investment, most accounts would be depleted within a decade with this withdrawal rate.

Most financial advisors would recommend that you take out 4 percent a year. This strategy could work, but if invested in a traditional mutual fund a 40 percent decline could really derail the plan. We create plans for clients that are within their risk tolerance and will have a high probability of success.  Nothing could be worse than running out of money!  Our goal is to make sure that will not happen.