What happens if you run out of money in retirement

How do you feel about your retirement savings? 

Research from Allianz Life has found that more than 60% of those born between 1946 and 1964 have a greater fear of running out of money than passing away. Further to this, the study found that 77% of those aged between 44 and 49 are just as fearful; and this figure increases to 82% for those who are married with dependants. 

A report from the World Economic Forum has warned that male British pensioners could run out of money 10.3 years before they die, whereas female pensioners are expected to outlive their pension pots by 12.6 years. The report also found that there is a general retirement savings deficit for most pensioners in western countries, so it’s not merely a British problem. 

Longer lives, less proactive saving, higher costs of living and lack of a financial plan are all contributing factors to the risk that many of us are outliving or are going to outlive our assets in retirement. Which begs the question: what steps are people taking to prevent this?

Only 18% of respondents to the Allianz Life survey said they were taking proactive steps to secure their finances for retirement, whereas 35% were considering the implications but had not yet come up with a plan. While it’s definitely helpful to develop a financial plan for your retirement on your own, sometimes structuring it in collaboration with an outside professional can help take it the extra mile. Then you can create a robust and tested financial plan that’ll go the distance in retirement.

And that is where a financial adviser comes in…

What can an adviser do?

An adviser will conduct cash-flow forecasting to help determine what your sources of money will be in retirement, and help you determine how much you will need to live the lifestyle you want to live. 

Having a financial plan in place can really help to alleviate those fiscal worries. An adviser can even conduct scenario planning and stress test your plan to help give you the reassurance you need. Money is an incredibly emotional factor in many of our lives – it can be a great source of stress and worry – so it’s worth taking due care and preparing yourself as best you can for when you don’t have the guarantee of income from work. 

How much do I need in retirement?

The answer to this question in a nutshell is that it depends on the lifestyle you want to have. It also depends on when you want to retire. Some of our clients want to retire early, so they need their funds to last longer. Others want to travel and see the world after working hard for a good portion of their lives, therefore they’ll need money allocated to cater to that lifestyle choice. 

If you’re feeling worried about your finances in retirement, feel free to get in contact with us today. Speaking with a professional financial adviser and establishing your financial plan and retirement can give you the peace of mind you need, so you can focus on living the life you want to lead.