The biggest fear of retirement

Of course, everyone knows the biggest fear that retirees have: dying broke.

According to the accounting firm of Ernst & Young and the Center for Retirement Research at Boston College, a household relying on income from Social Security and from $300,000 or less in savings has a 90% of going broke.

How does this happen? According to the research it is a combination of things, but mostly it boils down to unexpected expenses and increasing income on depreciating assets. That is just a fancy way of saying that every time you need money above income, you reduce your assets. And, every time you reduce your assets, you reduce your income because there are fewer assets available to produce income.

Now, here is the big question: is there anything that can be done about this? The answer is YES. It can often be as simple as taking a portion of the existing assets and turning them into lifetime guaranteed income to supplement the Social Security income. When sufficient assets are devoted to producing income, the need to tap into other assets is greatly reduced. We have seen from experience that the odds of going broke can be flipped to a 90% chance of never going broke rather than a 90% chance of outliving assets.

Related posts:

1. Income Drawdown
2. Income is the Outcome