- Home
- 3...
3 reasons why boomers are eating through their retirement savings so quickly — how to preserve your nest egg
Baby boomers have an average of $120,300 saved for retirement, according to Northwestern Mutual’s Planning & Progress Study 2024. Considering that the consensus among boomers is that it'll take $990,000 in savings to retire comfortably, that's troubling.
Don't miss
- Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
- Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)
- These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
It may also explain why so many older Ameicans are concerned about running out of money in retirement. But here are three other reasons why baby boomers might be eating into their savings at too rapid a pace.
1. They got a late start
Northwestern Mutual’s study found that the typical boomer, and older generations, started saving at age 37. Because of this, a good number of boomers today may have a smaller nest egg than they actually need to live comfortably and are dipping into their savings at a faster pace because they have immediate bills they can’t put off.
Some boomers may have also taken a less aggressive approach to retirement savings because they expected Social Security to replace much of their retirement income. But according to the Social Security Administration, on average, retirement benefits will only replace about 40% of pre-retirement earnings.
2. Some were forced to retire
Some people put off retirement savings with the expectation that they'll catch up later on in their careers, such as when they've finally paid off their mortgages, no longer have children living under their roof or are earning a higher income. One problem, though, is that some older workers may be ushered into retirement against their will. A 2023 survey from investment banking company Edward Jones found that 40% of retiree clients among financial advisers across the industry were forced to end their careers.
Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
An early, unexpected retirement can put anybody at risk of a host of financial struggles. Namely, it can wipe out years of potential savings and derail retirement planning. Possible reasons for a forced early retirement include health problems, job cuts or having an outdated skill set, according to Citizens Bank.
3. High cost of health care
Fidelity reports that the typical 65-year-old in 2023 could expect to spend an average of $157,500 on health-care costs throughout their retirement, assuming they're enrolled in Medicare (Parts A, B and Part D). That figure accounts for Medicare premiums, copays and other out-of-pocket costs.
Since many boomers today are starting out with limited savings to begin with, it’s easy to see why health-care expenses may be forcing them to blow through their cash reserves at a rapid pace.
Preserve your savings
It’s not so shocking that baby boomers are spending their nest eggs quickly. But if you’re worried about your savings dwindling down, you can work with a financial adviser to establish a safe withdrawal rate given your balance and expenses.
You may also want to consider boosting your retirement income with part-time work to take the pressure off of your savings. And finally, maintaining a stock portfolio can add to your savings even as you’re tapping into them.
What to read next
- ‘No turning back’: This Wall Street bear is predicting the biggest market crash since 1929 — Here’s how to prepare your portfolio if he’s right
- Nearly 70,000 Americans have saved $63M by using this 1 simple tool to pay off crippling debt quickly — and it's completely free
- 'You didn't want to risk it': 80-year-old woman from South Carolina is looking for the safest place for her family's $250,000 savings. Here's Dave Ramsey's response
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
- https://www.msn.com/en-us/money/retirement/3-reasons-why-boomers-are-eating-through-their-retirement-savings-so-quickly-how-to-preserve-your-nest-egg/ar-BB1pvHwG?ocid=00000000
Related
Dave Ramsey: Follow These 5 Steps If You’re Running Out of Money
Living paycheck to paycheck is no fun -- worrying about how to pay your light bill while eating the same ramen noodles each night is rough, to say the least. Waiting for your next paycheck can feel...
MoneyFlorida resident sounds off on high cost of living: 'It doesn't make sense anymore'
Fox News correspondent Danamarie McNicholl discusses the impact of high living and housing costs for Americans.
MoneyThese 5 Rare Quarters From Over 20 Years Ago Are Worth a Ton Now
Before you head to the laundromat, you should look through the quarters you plan to spend. You may have a rare coin better suited to be auctioned off or artfully displayed than used to wash your...
MoneyRoadside Assistance: A Lifesaver on the Road
Roadside assistance covers common roadside emergencies like dead batteries and flat tires. Learn about roadside assistance to see if the cost is worth it.
MoneyBuffalo Nickels Could Be Worth Thousands — How To Spot One
Buffalo nickels are nostalgic coins that were in circulation from 1913 until 1938. Once a regular discovery in everyday life, these coins are now valued antiquities from a bygone period. They were...
Money4 Unusual Coins That Are Surprisingly Worthless — And Why
The world's most valuable coins usually have some combination of rarity, historical significance, unusual features and minting errors. When at least a couple of those boxes are checked, you can expect...
Money27-year-old 'House of Dragon' star couldn't afford drama school, but was determined to break into the industry 'by hook or by crook'
Ewan Mitchell was determined to break into the entertainment industry 'by hook or by crook.'
MoneyI’m a Mechanic: Never Go to the Car Dealership for These 10 Services
If you don't have an automotive expert in your corner who you can trust to quote you fair prices for parts and labor, it can make it tricky when it comes time to fix something on your personal mode of...
Money