We all dream of a comfortable retirement in which we enjoy our favorite activities and time with our loved ones. But unfortunately, sometimes life has other plans.
An unexpected and unwelcome event – an expensive illness, a deep and permanent fainting in the stock market – can drain most or all of our savings and instantly throw us into a financial crisis. If that happens, what will you do?
Answering this question before retirement is critical. Recently, the Insured Retirement Institute asked nearly 1,000 Americans between the ages of 40 and 73 where they would go if they run out of money during retirement. Here are their top answers.
5. Rely on family and friends
When you break down, you quickly find out who your friends are. Among Americans ages 40 to 73 surveyed, 8% said they would turn to family and friends if they run out of money in retirement.
Of course, having to make such a request is inconvenient at best. Having extra cash stashed away can save you the time you need to figure out how to make more income without having to rely on others. For more information, see “9 Tips for Starting an Emergency Fund Today.”
4. Dependence on children
We live in an age when adult children regularly return to their parents’ nest long after they reach adulthood. So, perhaps it is only fair that these parents turn to their children in a time of financial need.
Overall, 10% of survey respondents said this would be their strategy after bankruptcy. Kids, you have been warned!
3. Seek help from the church, state, etc.
Americans pride themselves on being self-sufficient. But at some point, almost all of us need a helping hand.
Of those surveyed, 11% said they would look to the church, government or similar institution for help when they run out of cash.
2. Return to work if possible
It is not surprising that people who have run out of money start looking for a job. It is simply the best and fastest way to rebuild your savings after they are exhausted. For this reason, 38% of survey respondents said their first response to running out of cash is unease.
Of course, returning to the workforce late in life can be easier said than done. Age discrimination is a fact of life, and health problems can make it difficult to get and keep a job.
But if you are up to the challenge, you should be able to find work even later in life. For more tips, check out “20 Great Part-Time Jobs for Retirees.”
1. Downsizing on Social Security
Retirees who run out of money quickly thank their lucky stars for Social Security. No matter what happens to your personal cash stock, the state’s retirement system will be there to prevent you from going bankrupt.
In fact, 62% of older Americans say their first response to running out of money in retirement would be to downsize their life so they can live on their Social Security benefits alone.
Certainly, getting Social Security alone is easier said than done. The system was never intended to provide the only source of income for retirees. The average retired worker benefit payment is just $1,559 per month.
That won’t happen
Of course, there is a segment of people – in this case, 17% of survey respondents – who say that simply never running out of money. We admire their optimism.
And of course, there’s a good chance they’re right, especially if they’ve been diligent, smart, and invested savers throughout their working lives.
Want to increase the odds that you won’t end up in bankruptcy? Subscribe to the Money Talks News Retirement Course, The Only Retirement Guide You’ll Need.
This 14-week bootcamp is for those 45 and older and can teach you everything from Social Security secrets to how to determine when you retire.
For more tips, check out Money Talks News founder Stacy Johnson’s podcast “How to Avoid Running Out of Money in Retirement.”
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