What if I Outlive My Savings?

VIDEO: Many of us may need to financially survive until age 120. To do that you'll need to ask yourself serious questions aout how your work, health and spending

Ruth Saldanha 13 May, 2021 | 3:01PM
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Ruth Saldanha: You are happily retired, living your best life. Late one night, you wake up in a cold sweat from a nightmare. You're running out of money. What if I outlive my savings?

The fact is, we are living longer. World over life expectancy is rising, especially in the developed world. It isn't inconceivable that you or some of your peers might live to 120 years old. In that scenario, can you retire at 65? Will you have enough? First, don't panic. You have a couple of options.

Christine Benz: You really have two levers if you don't have enough. The first is to continue working. The second is to find ways to lower spending in retirement, like downsizing your home or relocating to a cheaper locale.

Saldanha: Start by considering your retirement plan with fresh eyes. You may want to travel the world or buy a motorcycle, or you may be sick. All of this needs money. Ask questions like how long will you continue to work, how much will you save, what's your health going to be? Understand that standard investment strategies may no longer fit your individual needs. So, you may need to adjust your strategies, you may need to work longer, pursue more aggressive investment strategies for longer than you'd intended.

Next, look at your spending. How much is necessary and how much can be manipulated just a little? Ask yourself if your habits are sustainable. Once you know where you are, you can adjust again.

This video was scripted by Susan Zhou

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor, Morningstar.ca