Retirees Will Outlive Their Savings by 10 Years, According to a New Study by the World Economic Forum

The typical 65-year-old has only enough savings to cover 9.7 years of retirement income. That leaves the average American man with a gap of 8.3 years, and women (who live longer) face a 10.9-year gap with no savings left.

That’s according to a scary new study by the World Economic Forum. This assumes you live an average lifespan. If you’re one of the “lucky” ones who lives longer, you could outlive your money by 20 to 25 years or more.

6 Challenges You Face that Could Turn Your Retirement Dreams into a Retirement Nightmare…

How many of these challenges have you prepared for?

Challenge #1: The typical household nearing retirement has an average of only $135,000 in their combined retirement accounts – enough to provide at most $600 per month income. (Source: Federal Reserve Survey of Consumer Finances)

Challenge #2: Even healthy couples will face extreme health care costs in retirement.

A healthy 65-year-old couple retiring now will spend an inflation-adjusted $551,000 on out-of-pocket medical costs not covered by Medicare. (Source: Milliman Health Cost Guidelines)

This is significantly more money than many pre-retirees have saved. If you live longer than average or have some health problems, your costs could be much higher.

Challenge #3: You’ll owe the IRS 25-50% of your savings when you take income from a tax-deferred account, such as a 401(k), IRA, 403(b), etc.

Most people look at their retirement plan balances and think it’s all theirs. They tend to forget they’ll owe the IRS taxes on every penny they’ve put in and every penny of growth.

And if tax rates go up – which is highly likely due to our country’s exploding debt and aging demographics – you’ll need to be prepared for an even higher tax bill.

Challenge #4: If you’re counting on Social Security to help close the gap, keep in mind that Social Security benefits have lost 1/3 of their buying power since 2000, as many of the things retirees typically purchase have increased several times faster than Social Security cost-of-living adjustments.

Challenge #5: The typical investor in equity mutual funds has earned only 3.88% annually for the past 20 years – beating inflation by a meager 1.7% per year.

Asset allocation and other types of investors actually lost ground over the last two decades when factoring in inflation. (Source: Dalbar 2019 Quantitative Analysis of Investor Behavior)

Challenge #6: If you’re planning on following the once-recommended “4% rule,” which said retirees could take 4% out of their retirement accounts each year, then you have a 50% probability of running out of money over 30 years.

The current recommended annual withdrawal rate is just 2.8%. If you have a $500,000 nest-egg, that would give you just $1,166 per month. If you have $200,000 saved, you could withdraw $467 per month. And with $1 million saved, that’s $2,333 a month.

When you hit retirement, what kind of lifestyle do you think that will provide you?

What more proof do we need that conventional investing and retirement planning strategies aren’t working?

Isn’t continuing to do the same thing with an expectation of different results the classic definition of insanity?

When you Bank On Yourself instead of banking on Wall Street, the government, or your employer to provide for your retirement security, you get these benefits and more…

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  • Because the growth in these plans is exponential and your premium is guaranteed never to increase, you enjoy some built-in protection against inflation

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