An unanticipated and unwelcome event such as an expensive illness or a deep and long stock market drop, can drain most or all of our savings and instantly throw us into a financial crisis.
If that happens, what would you do? Will your nest egg be enough for retirement?
It’s important to plan ahead and answer this question before you retire. Let’s look at five things Americans can do if they run out of money in retirement.
The Insured Retirement Institute recently asked nearly 1,000 Americans ages 40 to 73 where they would turn if they ran out of money during retirement. Here are their top answers.
- Rely on family and friends. Among Americans ages 40 to 73 surveyed, about 8% said they’d ask their family and friends for help if they ran out of money in retirement. However, having extra money socked away can buy you the time you need to determine how to generate more income without having to rely on others.
- Rely on children. Overall, 10% of survey respondents said moving in or relying on their adult kids would be their strategy after going broke.
- Seek assistance from a church, the state, etc. Among those surveyed, 11% said they’d ask for assistance from a church, the government, or a similar institution, if they ran out of cash.
- Return to work if able. Finding a job is the best and quickest way to rebuild your savings after it’s been depleted. About 38% of respondents said their first response to running out of cash would be to unretire. However, returning to the workforce late in life can be easier said than done with age discrimination a fact of life and possible health problems.
- Downsize to live on Social Security. Regardless of what happens to your own personal cash stash, Social Security— the nation’s retirement system— will be there to keep you from becoming penniless. The survey found that 62% of older Americans say their first response to running out of money in retirement would be to downsize their lives, so they could live on their Social Security benefits alone. However, the system was never designed to provide a retiree’s sole source of income, since the average retired worker’s benefit payment is only $1,559 per month.