Life & Money Retirement

Do People Run Out Of Money In Retirement?

The financial stability of retirees is a growing concern in many countries as populations age and people live longer. Running out of money during retirement can lead to significant challenges, impacting the quality of life and well-being of retirees.

People do run out of money during retirement. This can happen for various reasons, including insufficient savings, longer-than-expected lifespans, high medical expenses, inflation, poor investment performance, and unexpected life events.

Careful planning, consistent saving, and wise investing are essential to ensure a secure and comfortable retirement. However, various factors, such as insufficient savings, increased life expectancy, rising healthcare costs, and inflation, can still result in financial difficulties for some retirees. 

Understanding the risks and potential solutions can help individuals prepare for and navigate the complex landscape of retirement finance, reducing the likelihood of running out of money and promoting a more secure financial future.

Let’s review what to consider and keep in mind to avoid running out of money before or during retirement!

What Percentage Of People Run Out Of Money In Retirement?

It’s difficult to provide an exact percentage of people who run out of money in retirement, as this can vary significantly depending on factors such as country, socioeconomic status, and individual financial choices. However, studies and surveys consistently indicate that a significant portion of retirees face financial challenges during their retirement years.

“For households age 35-39—in other words, those with much of their career left to save for retirement—the RSPM predicts that in the current system, 34 percent of White households will run short of money in retirement, with an estimated deficit of $40,500 in today’s dollars. However, 48 percent of Black and Hispanic households in this age cohort are projected to run short of money”

Employee Benefit Research Institute Statement on Gaps in Retirement Savings

The EBRI’s Retirement Security Projection Model (RSPM) is designed to assess retirement income adequacy for American households. The model takes into account factors such as current retirement savings, projected Social Security benefits, and defined benefit plans.

The EBRI releases periodic reports on this subject, and the results may vary from year to year. You can find more information about their studies and findings on the EBRI website:

Given that the EBRI periodically updates its studies, I encourage you to visit their website or search for their latest research to get the most up-to-date and accurate information on retirement income adequacy in the United States.

How Likely Are You To Run Out Of Money In Retirement?

The likelihood of running out of money in retirement depends on several factors, including:

  1. Savings: The amount of money saved for retirement, including retirement accounts like 401(k)s, IRAs, and pensions.
  2. Investment performance: The rate of return on retirement savings and investments, which can impact the growth of these assets over time.
  3. Retirement expenses: The cost of living during retirement, including housing, healthcare, and daily expenses.
  4. Inflation: The impact of rising prices on the purchasing power of retirement savings.
  5. Life expectancy: The length of time an individual lives in retirement, which can affect how long their savings need to last.
  6. Government benefits: Social Security benefits or other government pensions, which can supplement retirement income.
  7. Personal circumstances: Unforeseen life events, such as medical emergencies or the need to financially support family members, can affect retirement finances.

Individuals can reduce the likelihood of running out of money in retirement by planning carefully, saving consistently, and investing wisely. It’s also helpful to regularly review and adjust one’s retirement plan, taking into account changes in personal circumstances and financial goals. Consulting with a financial advisor can provide personalized guidance on creating a retirement plan that meets one’s unique needs and objectives.

I recommend reading this article on factors to consider before retiring.

Research On The Likelihood Of Running Out Of Retirement Money

The likelihood of running out of funds during retirement is actually a real threat and more common than people would think! Running out of money is the top fear of retiring. 

The Center for Retirement Research at Boston College created the National Retirement Risk Index (NRRI), which “measures the percentage of working-age households that are at risk of being unable to maintain their pre-retirement standard of living in retirement.”

“Key findings in the NRRI show that: … About half of households are “at risk” of not having enough to maintain their living standards in retirement.”

NRRI is a good resource for the latest research on the topic.

What Do Retirees Do When They Run Out Of Money?

When retirees run out of money, they may need to take various steps to address their financial situation. Some common options include:

  1. Reducing expenses: Cutting back on non-essential spending, downsizing to a smaller home, or moving to a more affordable location can help retirees lower their living costs.
  2. Government assistance: Retirees may be eligible for various government benefits, such as Social Security, Medicaid, or Supplemental Nutrition Assistance Program (SNAP). These programs can help provide financial support and access to essential services.
  3. Returning to work: Some retirees may choose to return to work, either full-time or part-time, to supplement their income. This could involve seeking employment in their previous field, starting a new career, or pursuing gig economy opportunities.
  4. Tapping into home equity: Retirees who own their homes might consider using a reverse mortgage, which allows them to access the equity in their home to generate additional income. However, this option should be carefully considered, as it can have long-term financial implications.
  5. Selling assets: Retirees can consider selling personal assets, such as a vehicle or collectibles, to generate additional funds.
  6. Seeking assistance from family or friends: In some cases, retirees might turn to family members or friends for financial support or help with essential expenses.
  7. Debt management: Working with a financial counselor or credit counseling agency can help retirees develop a plan for managing and potentially reducing their debt.
  8. Financial assistance programs: Local non-profit organizations and charities often provide financial assistance and resources, such as food banks or assistance with utility bills, for individuals facing financial hardship.

It’s important for retirees to carefully assess their situation and consider their options before making decisions that could have long-term financial consequences. Consulting with a financial professional or counselor can provide guidance and help retirees make informed choices about their financial future.

How To Avoid Running Out Of Money In Retirement

To avoid running out of money in retirement, consider taking the following steps:

  • Start planning early: The sooner you begin planning for retirement, the more time you’ll have to save, invest, and make adjustments as needed.
  • Save consistently: Set aside a portion of your income for retirement regularly, and take advantage of employer-sponsored retirement plans, such as a 401(k) or similar programs, if available.
  • Diversify your investments: Spreading your investments across different asset classes can help minimize risk and potentially provide better long-term returns. Consult a financial advisor to create a diversified investment portfolio that aligns with your risk tolerance and retirement goals.
  • Create a realistic budget: Estimate your retirement expenses, including housing, healthcare, and daily living costs. This will help you determine how much money you’ll need to maintain your desired lifestyle during retirement.
  • Factor in inflation: When planning your retirement savings, consider the potential impact of inflation on your purchasing power. Adjust your savings goals accordingly to account for the rising cost of living over time.
  • Delay Social Security benefits: If you’re eligible for Social Security, consider delaying your benefits until you reach full retirement age or beyond. This can result in higher monthly payments, which can help support you during retirement.
  • Plan for healthcare costs: Long-term care and unexpected medical expenses can significantly impact your retirement savings. Consider purchasing long-term care insurance, and factor potential healthcare costs into your retirement budget.

    If you are retiring before age 65, check out this article on what to do about health coverage.
  • Maintain an emergency fund: Having a cash reserve for unexpected expenses can help protect your retirement savings from sudden financial shocks.
  • Monitor and adjust your plan: Regularly review your retirement plan and make adjustments as needed, considering factors such as changes in income, expenses, or personal circumstances.
  • Consult a financial advisor: Working with a financial professional can provide personalized guidance and help you create a retirement plan that meets your unique needs and objectives.

By implementing these strategies and maintaining a proactive approach to your retirement planning, you can significantly reduce the risk of running out of money during your retirement years.

Tips To Help You Prepare For A Financially Secure Retirement

  • Keeping these additional tips in mind and taking a comprehensive approach to your retirement planning, you can further increase your chances of enjoying a financially secure and fulfilling retirement.
  • Pay off high-interest debt: Prioritize paying off high-interest debt, such as credit card balances, before you retire. Entering retirement with minimal or no debt can significantly reduce your financial stress.
  • Consider part-time work or a side gig: If you enjoy working, consider part-time employment or a side gig during retirement. This can provide additional income, help you stay active, and maintain social connections.
  • Maximize Social Security benefits: Learn about strategies to maximize your Social Security benefits, such as coordinating benefits with your spouse, working at least 35 years, and checking your earnings record for accuracy.
  • Understand your withdrawal strategy: Develop a sustainable withdrawal strategy from your retirement accounts, considering factors like taxes, required minimum distributions (RMDs), and market fluctuations.
  • Stay flexible: Be prepared to adjust your spending habits or lifestyle during retirement, depending on your financial situation. Staying flexible can help you weather financial challenges more effectively.
  • Continue learning about personal finance: Stay informed about personal finance trends and best practices to help you make better financial decisions during retirement.
  • Leverage senior discounts and benefits: Many businesses and organizations offer discounts or benefits to seniors, such as reduced prices for transportation, entertainment, or dining. Take advantage of these opportunities to save money and stretch your retirement budget further.
  • Invest in your health: Maintaining good health can reduce medical expenses and improve your quality of life during retirement. Engage in regular exercise, maintain a balanced diet, and schedule routine check-ups with your healthcare providers.
  • Consider downsizing or relocating: If your current home is larger than necessary or located in a high-cost area, consider downsizing or relocating to a more affordable location. This can help reduce your housing expenses and free up additional funds for other retirement needs.
  • Discuss your financial situation with your family: Communicate with your family members about your retirement plans and financial situation. This can help ensure that everyone is on the same page and prepared to provide support or assistance if needed.


Securing a financially stable retirement requires careful planning, consistent saving, and wise investment decisions. By starting early, diversifying investments, creating a realistic budget, factoring in inflation, and planning for healthcare costs, individuals can significantly reduce the risk of running out of money during retirement. 

Additional strategies, such as maximizing Social Security benefits, paying off high-interest debt, maintaining flexibility, and staying informed about personal finance trends, can further contribute to a comfortable and secure retirement. 

Open communication with family and seeking professional guidance from financial advisors can also support informed decision-making and help ensure that retirees enjoy a financially stable and fulfilling retirement, free from the stress of outliving their savings.