Avoid running out of money in retirement

Don't confuse eligibility with ability to retire
Don't confuse eligibility with ability to retire © gpointstudio/

To get a better idea about Americans' retirement preparedness, the Employee Benefit Research Institute has been surveying individuals on their retirement confidence annually for more than 20 years. And one of its findings is that people consistently don't take the first step to avoid running out of money in retirement.

Dallas Salisbury, EBRI's president and CEO, says that, surprisingly enough, less than 40 percent of the survey respondents going into retirement have calculated how much they expect their expenses and income will be in retirement. This is important because the traditional approach that called for 75 percent to 80 percent replacement of pre-retirement income is based on an era when long-term care insurance policies were very good and more readily available than they are today. And people believe that Medicare pays for more than it actually does.

"The number one thing to do is to make sure that you have done a thorough assessment of what your expenses are likely to be and how much income you will need to cover those expenses," says Salisbury. That way, you may find that even though you are eligible to retire, having reached a certain age, you may not actually be able to retire.


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