Warning: Many Seniors May Run out of Money in Retirement

Excessive Withdrawals – The old 4-percent rule of thumb isn’t a wise reference point for income any longer when you consider a retirement portfolio’s distributions of stock dividends and bond interest are generally below the antiquated benchmark. Most financial advisors recommend 3 percent, some even lower. However, most retirees don’t meet often enough to make adjustments in their distributions and continue to withdraw at levels their portfolio can’t sustain, resulting in portfolio principle loss.

Bad Investor Behavior – Some seniors raid their retirement portfolios to fund unscheduled events like home repair, a sudden trip to Europe or emergency medical costs. Few understand their retirement portfolio was most likely predicated on monthly income needs based on their retirement plan. Bad investor behavior can cannibalize portfolio principle.

The Sequence of Market Returns – The rules that govern the accumulation phase before retirement are not the same rules during distributions in retirement. The strategies are different ascending to retirement, then those descending during retirement. Take mountain climbing: Most of the deaths occur during the descent. The biggest retirement mistake is not adjusting your withdrawals for the downward market cycles and readjusting the new lower threshold that has now become “par.”

Extended Longevity – If you concede the average survivor of a married couple will live to age 93, then you may need to plan for a longer retirement based on living longer than the average. Willard Scott celebrated centurions on his TV show. There’s more than 72,000 in the U.S. Susanna Jones just died in May of this year at 116. She was a tri-centurion and a super-centenarian teenager. Jean Calment lived to age 122 and is the oldest person who ever lived according to the Guinness Book of World Records. Dr. Aubre De Grey, noted gerontologist, has said that the person who will live to age 150 has already been born. Could that be you?

The four horsemen of the financial apocalypse are coming, and it will be economic Armageddon.