65 has been seen as the “magic number” for retirement. However, new research shows that retiring at this age might not be the best financial decision for most people. A report from the Morningstar Center for Retirement & Policy Studies reveals that nearly half — 45% — of Americans who retire at age 65 are at risk of running out of money before the end of their lives.
The Morningstar study used a retirement savings simulation tool to predict how long a person’s income might last. The tool factors in things like age, income, savings habits, health care expenses, and life expectancy. Here are the key findings:
- Single women are at the highest risk, with 55% likely to run out of money.
- Couples have a 41% chance.
- Single men fared slightly better, at 40%.
This data highlights the challenges of ensuring enough savings for a comfortable retirement, especially for women who tend to live longer and face higher healthcare costs.
Why Working Longer Makes a Difference
Morningstar emphasizes that working beyond age 65 can significantly reduce the chances of running out of money. An additional five years in the workforce can have a big impact, as it:
- Shortens retirement years: Working longer means you spend fewer years relying solely on your retirement savings.
- Grows your savings: Additional work years give investments more time to grow.
- Maximizes Social Security benefits: Delaying Social Security until age 70 ensures you receive the highest possible monthly payment.
If you work until age 70, the likelihood of running out of money decreases significantly:
- Single women: 36% chance.
- Couples: 26% chance.
- Single men: 21% chance.
Social Security as a Lifeline
The study points out that completely running out of money is rare for most Americans. Even if all savings are depleted, Social Security benefits provide a monthly income for life. While living solely on Social Security can be challenging, it’s possible with smart financial planning and lifestyle adjustments.
For tips on how to make the most of Social Security, consider exploring guides like “8 Tips to Retire Comfortably on Social Security Alone.”
Plan for a Secure Retirement
Retirement planning is essential, and starting early is key. Make sure to:
- Save consistently: Even small amounts add up over time.
- Budget wisely: Track expenses and prioritize essentials.
- Seek professional advice: Financial advisors can help tailor a retirement plan to your needs.
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Archer Bannister is a journalist with 4 years of experience covering hard-hitting stories. Currently working with Mikeandjonpodcast, Archer specializes in delivering timely and in-depth updates on a variety of topics, including crime news, politics, and national issues affecting the USA. His expertise and dedication to delivering accurate, impactful news make him a trusted voice for audiences seeking to stay informed on critical topics.
