This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What to Do When You Outlive Your Retirement Funds

NEW YORK ( MainStreet) -- The idea of retiring comfortably has become the new American dream for many households, but all too often it's a dream that doesn't come true.

In what may be the most depressing study to come out in recent memory, researchers from MIT, Dartmouth and Harvard found that nearly half of retirees had less than $10,000 in their retirement savings plans the year before they died and 55% had less than $25,000. To make matters worse, many of these people had no home equity to speak of either.
The sad truth about planning for retirement is that too many Americans just don't.

The report, published this month by the National Bureau of Economic Research, reaffirms a point that many financial advisers have been hammering for years: Americans do not set aside nearly enough money and investments to last through their retirement. The result is that many retirees find themselves broke or close to it in their final years.

Much of the reason for this, according to Jean Setzfand, AARP's vice president for Financial Security, is that about half of today's retirees assumed they could rely solely on Social Security as a source of income and so they didn't get into the mindset of saving for retirement. These are most likely the 46% of retirees who passed away with less than $10,000 in savings. The other half, she says, were the ones fortunate to be covered by pensions. Unfortunately, the dynamic may not be much better for those who have yet to retire.

"Only about half of workers are covered by employers from a retirement benefits standpoint. That hasn't changed," Setzfand says. What has changed, she says, is that those retirement programs are now more employee-driven (meaning 401(k)s) rather than employer-driven (meaning pensions). "I'm not sure that we are in a better position. If you look at the numbers on how much people have saved for themselves - the numbers aren't great."

Indeed, one survey put out by Wells Fargo (WFC) last year found that 29% of workers in their 60s had saved up less than $25,000 for their retirement even though they expected that money would have to hold them over for more than two decades. When you combine those anemic savings with the fact that people are living longer and the ever-increasing cost of prescription drugs and treatments, it's little surprise that so many would come close to running out of money later in life.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $115.07 -2.80%
FB $93.98 -0.17%
GOOG $630.00 -0.19%
YHOO $37.02 0.90%
TSLA $265.46 2.10%

Markets

Chart of I:DJI
DOW 17,523.07 -75.13 -0.43%
S&P 500 2,092.04 -6.00 -0.29%
NASDAQ 5,101.5660 -13.8160 -0.27%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs