Are Retirees Running Out of Cash?

Are Retirees Running Out of Cash?

By the time retirement finally rolls around, aimless spending will be a mistake of the past … right? After all, you’ll have been managing your finances for decades.

Unfortunately, for many current retirees, this isn’t quite how their golden years are playing out.

Survey results released in April by PNC Financial Services Group found that 52% of retirees don’t have an income strategy in place—and are withdrawing money from their retirement accounts whenever the need arises.

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What’s wrong with this picture? For starters, those who spend their savings without a plan risk depleting their cash—at a time when they’re older, unemployed and unlikely to be able to rebuild their nest egg.

In fact, the telephone survey of 1,206 adults aged 35 to 75 indicates that 53% are concerned about this exact scenario—and 63% are worried their pensions or Social Security checks won’t be enough to cover all their expenses.

Fortunately, two-thirds of respondents who reported being worried about outliving their money have made an effort to reduce the likelihood: 41% are budgeting more carefully and 59% are cutting costs.

Still, nearly one-third of survey respondents indicated that they had no expectations about their retirement costs—which is exactly the problem.

To prevent this issue for younger generations, Joseph Jennings, senior vice president of wealth management for PNC, told MarketWatch that we should be modeling out what retirement will truly look like.

“Ideally, what we would recommend is if you know that retirement is coming down the road in the not-too-distant future, let’s work on a plan to project what your income is going to be, what your expenses are going to be and then start following that model today, even though you’re not retired yet, just so you know how it feels and whether it’s going to work for you,” Jennings says.

But even if there are plenty of years between now and when you'll leave the workforce, it’s never too soon to start preparing. Need help getting started? Read how to retrain your brain to save more for retirement.

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