Test Your Knowledge: How Long Must Your Funds Last in Retirement?

Are you on track to get an “A+” in retirement, or do you risk flunking out?

Here’s a deceptively simple question posed to working Americans in the New Retirement Mindscape II survey sponsored by Ameriprise Financial:

How many years do you estimate you’ll live on your retirement savings?

Answer:

A).  15 years

B).  20 years

C).  25 years

D).  30 years

In the survey, most people answered “B,” showing they greatly underestimate the time they are likely to spend in retirement.

Unfortunately, the correct answer is “D,” or 30 years.

According to the survey sponsors, “while the average retirement age is 62, there is a 50% chance that at least one spouse of a married couple at age 65 will live to age 92 — which is why most financial advisors recommend that consumers plan for a retirement that will last 30 years.”

If your savings are only adequate for a retirement lasting twenty years or less, you run the risk of running out of money.

And since women usually live longer, it’s more likely that the female spouse, in a couple, will be left short of funds toward the end of her years (women age 65 and over are twice as likely to live in poverty than men).

The Take-Away:

One of the keys to planning for retirement is understanding how long it might last.

To be prepared, you need to save 10%, or better yet, 15% of your annual income for your future needs.

Need help with a plan to get you there?  Give us a call to get started.

 

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!
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