This Day On The Street
Continue to site right-arrow
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,814.94 -2.96 -0.02%
S&P 500 2,067.03 -2.38 -0.12%
NASDAQ 4,758.2520 +3.36 0.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs