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For most retirees, the greatest fear is not death—it is running out of money before they die.

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AUTHOR: Matt Halperin on 8/06/2026

A recent Barron’s article notes, “for most retirees, the greatest fear is not death—it is running out of money before they die.” As one survey they cite put it, “The prospect of running out of money in retirement is scarier to more people than death.” The same article described a new tool that promises to estimate more accurately how long we are likely to live. Life expectancy is one of the most important assumptions in any retirement plan because it answers a fundamental question: How long will my savings need to last?

The savings need between planning for age 88 and age 100 is enormous. It affects how much you can safely spend each year, how much risk you can take, and how much you should save before retiring.

As we grow older, our perception of our own longevity also changes. We watch friends, siblings, and spouses pass away, and those experiences inevitably shape our expectations. But the real question is not -How long do we think I will live? It is -What happens if we live longer than expected?

Why “we”? Consider a 65-year-old couple. He may have roughly a 35% chance of living to 90; she may have roughly a 45% chance—women consistently outlive men at every age. But the couple’s joint odds are higher still: the probability that at least one of them reaches 90 is significantly greater than either number alone. So the question needs to be what if I or my spouse live longer than expected.

So how should you plan?

Suppose your financial planner’s model estimates that you have only a 20% chance of living past age 88. Does that mean you should confidently spend your last dollar at 88? That does not strike me as prudent.

A well-known economist once posed the issue this way: “Would you accept a 20% chance of running out of money?… Would you play Russian roulette with a six-shooter?”

Planning for a longer life means accepting lower spending throughout retirement. It is the same tradeoff we have faced our entire working lives: enjoy more today or preserve more for tomorrow.

There are few ways to manage longevity risk. The most direct way is creating more guaranteed lifetime income. Delaying Social Security increases your inflation-adjusted lifetime benefit and provides a larger income floor. (Setting aside concerns about the long-term finances of the Social Security system.) Deferred income annuities offer another approach. For example, a 65-year-old might pay $100,000 today in exchange for approximately $5,500 per month beginning 20 years from now if the person is still alive. The payments generally are not inflation-adjusted, but they ensure against the financial consequences of exceptional longevity. And of course one can save more. Each of these strategies requires sacrificing some spending today in exchange for greater financial security tomorrow.

Of course, many retirement plans assume spending naturally declines with age. People travel less, entertain less, and often downsize their homes. Those assumptions are reasonable—but they are not guaranteed.

Just last week, The New York Times profiled someone in their 90s who was still hiking New Hampshire’s White Mountains—I found that challenging in my 50s. A friend recently told me that his mother actually became more mobile in her later years after getting a mobility scooter. Medical advances and technology may extend not only our lifespans but also the number of years we remain active and engaged. If that is true, we may not be able to count on declining health to reduce our spending. And if it does, the costs of that technology may consume the savings. If health and technology extend active years, one might need more money later, not less.

Here is a useful thought experiment. Imagine your longevity model tells you that you have a 20% chance of living past age 87. Now imagine that same model told you there was a 20% chance you would die within the next seven years. Would you spend more today because your life might be shorter? Or would you continue on the same financial because you might live much longer?

We should hesitate to make dramatic changes based on either forecast. That is because retirement planning is not about predicting the future with precision. Planning is about preparing for uncertainty.

My own conclusion is that retirees should generally plan financially for a long life—perhaps age 95 or even 100—while recognizing that discretionary spending will probably decline over time. That approach reduces the risk of outliving one’s assets without assuming one will maintain the same level of spending forever.

While some may want to ‘bounce the check to the undertaker’, that precision in planning is not possible. Longevity forecasts have become more sophisticated. But they should still inform retirement planning, not dictate it. The goal is not to guess the exact year one will die. It is to make sure one’s money lasts if one is fortunate enough to live longer than expected.

I am sure others have thoughts on this difficult issue.

 

Matt Halperin, CFA, is the founder of Act2 Financial, an app that helps seniors avoid financial fraud. For 30 years, he worked as a portfolio manager and risk manager at large U.S. money managers. Matt currently serves on the investment committee of two endowments.  He has a BA and MBA from the University of Chicago and resides outside of Boston.

 

 

 

 

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Rick Connor
18 days ago

The discussion below about investing $100,000 in an annuity has me a bit confused. The original post considered a deferred income annuity as a means to address longevity risk. The post states that a 65 year old could purchase an annuity today for $100K that would pay $5,500 per month, starting in 20 years, at age 85.

The discussion below discussed the scenario of a 45 year old purchasing the same 20 year deferred annuity for $100k, and assumed the same $5,500 per month payout, but starting at 65. I just checked and a 45 year old purchasing a 20 year deferred annuity for $100K would receive $2,185 per month. This makes acturarial sense – a 65 year old should live much longer than an 85 year old, and receive many more payments.

If the 45 year old had instead invested the $100K, and it grew to $768K, it could purchase an immediate annuity paying about $5,213 per month for life. If the now 65 year old wanted some additional fixed income, he could purchase the same $2,185 per month as above for about $321K, and have about $450K left to invest.

I really like Dunn’s framing of the scenario below.

Fred Coldwell
18 days ago

If a retiree’s “greatest fear is not death—it is running out of money before they die,” then the rational path is to commit suicide in the month before they run out of money, as that would the lesser feared choice.  

Donny Hrubes
18 days ago

I paid off all my private ‘credit’ debt. That of course gives more income to save, or just do what ever.

Doing what we can while in the building phase to max the retirement money is very wise.
Then, lowering the spending in the distribution part makes life much easier with excess money.

Mark Bergman
18 days ago

“For most retirees, the greatest fear is not death—it is running out of money before they die.”
Excluding those who retired with negligible savings, does anyone on this forum know of someone who retired with say 1 M in assets – arbitrarily number I’ve chosen – or more, who subsequently ran out of money during their retirement ?

bbbobbins
17 days ago
Reply to  Mark Bergman

Good question. If you assume someone qualifies for SS then they have a baseline of inflation protected longetivity risk covered. I think the practical reality then is that anyone remotely responsible with $1m+ in investible assets never runs out of money in ordinary lifetime circumstances. They simply pare back the additional spend when the pot is looking shaky.

And sure you can probably find individual counter examples where someone thought “hey I’m a millionaire” and bought Lamborghinis or Deluxe cruise suites every vacation, but more likely you’ll find a sad story of those actually running out as a result of dementia related fraud/romance cons etc

Mark Bergman
16 days ago
Reply to  bbbobbins

re: but more likely you’ll find a sad story of those actually running out as a result of dementia related fraud/romance cons etc

if this is true, (and i am not saying yes or no) it could equally apply to retirees with very large portfolios, and therefore not really be due to a portfolio “failing”.

tman9999
19 days ago

While it may be true that many retirees fear running out of money, I’m less convinced that “most” do. For instance, survey data cited in this article (https://finance.yahoo.com/markets/articles/38-retirees-underspend-not-fear-133000039.html) shows that 38% of retirees actually fear underspending—something I’ve been hearing more about the past couple of years.

I ran into this issue myself when we first retired. A couple of years ago I discovered risk-based spending guardrails (RBSG), and it was an immediate “aha” moment, answering the two questions I’d been struggling with:

  • How much can we safely spend?
  • What are the chances we’ll need to change that amount?

Instead of obsessing over a Monte Carlo “probability of success,” RBSG tells us the likelihood that our spending will need to change—either up or down.

Combined with a bond ladder covering our fixed expenses, it’s given us a lot of confidence. Four years into retirement, we’re spending twice what we did while working, enjoying the retirement we envisioned, and without the anxiety about spending that seems to afflict so many retirees.

Last edited 19 days ago by tman9999
Larry
19 days ago

We are so thankful and blessed to have multiple pensions. But even if we didn’t I could never imagine as your example says ” handing over $100,000 to get $5,500 monthly in twenty years.

Catherine
19 days ago
Reply to  Larry

reminds me of Wimpy asking Popeye for money: “I will gladly pay you Tuesday for a hamburger today.”
Maybe one alternative would be to sit on that $100k (or whatever you would turn over) in a TIPS or a total stock fund for 20 years, then buy the annuity, if we’re still around to need it…

Dunn Werking
19 days ago
Reply to  Catherine

$100K invested in Vanguard Total Market Index Fund (VTSAX) for the last 20 years with dividends reinvested would be worth approximately $768,000 today (source AI).
Those buying an annuity over that period not only incurred the comparatively high cost structure of the annuity but also incurred the lost opportunity cost.
Annuities are the gateway to a mediocre retirement when purchased far ahead of retirement.
I personally could not imagine buying one even now after retiring but for some it may help them (and the annuity sales person) sleep better.

Ted Peters
19 days ago
Reply to  Dunn Werking

Consider this, though.
To generate $5500 per month ($66,000/ year) that $768,000 would have to generate 8.6% annually.
Or, if that $768,000 were placed in a safe place generating 5% annually, it would last about 18 years. Retiring at 65, it would last until age 83.
So there’s that.

Dunn Werking
18 days ago
Reply to  Ted Peters

Ted, I agree with your math. $5,500/month is $66,000/year, or an 8.6% initial withdrawal rate on $768K. But I think the more interesting question is when you make the annuity decision.
In our hypothetical, Person C commits $100K to a deferred annuity at age 45 in exchange for $5,500/month for life beginning at 65. That’s a legitimate way to insure against longevity and market risk. My objection is committing the money 20 years before you know whether you’ll actually need that insurance.
The alternative is to leave the $100K invested. If it achieved the historical return of the total U.S. stock market over those 20 years, it would be worth approximately $768K at age 65. At that point, you have both wealth and flexibility:

  • Stay invested in VTSAX/VTI.
  • Diversify to something like 60/40.
  • Annuitize some or all of the portfolio.
  • Buy an immediate annuity—or another annuity product.
  • Or decide you don’t need an annuity at all.

And you can make that decision based on your actual circumstances at 65: Social Security, other assets, health, spending needs, whether you’re still working, risk tolerance, longevity expectations and desire to leave money to heirs.
As for the $5,500/month withdrawal, I don’t think “8.6%” tells the whole story. The portfolio doesn’t have to earn 8.6% and preserve the $768K. It can consume principal.
As an illustration, using long-term historical average returns:

  • A 100%-stock portfolio could still have substantial assets after 20 years of $66K annual withdrawals and, under a simple constant-return illustration, could have significant assets remaining even at 100.
  • A 60/40 portfolio produces a less favorable result but, under those assumptions, could still last into the late 90s.

Those aren’t forecasts—sequence-of-returns risk could produce a much worse result. But again, the 65-year-old gets to assess that risk at 65, rather than having the 45-year-old make the decision for him.
And if the portfolio does well, the retiree gets something the pure-life annuity doesn’t provide: remaining capital and potential money for heirs.
My question is why voluntarily give up the flexibility of $100K at age 45 when you can preserve the option to buy that insurance at 65—or later—when you actually know whether you need it.
The annuity buys certainty of a specific outcome. The investment preserves optionality and the potential for growth. I’d rather preserve the optionality and only buy the certainty later if I feel I need it. In my case, I don’t see that day coming, so I’m glad I deflected all those annuity sales pitches years ago.

Last edited 18 days ago by Dunn Werking
DAN SMITH
17 days ago
Reply to  Dunn Werking

I can’t imagine buying the annuity at age 45, and I couldn’t bring myself to buy one at age 65 either. Still, there is an argument to be made on behalf of the insurance company.  What if one decade of the 20 year period is a lost one? $100k invested 2020 would only have grown to around $350k 20 years later. The insurance product is acting as it should by removing the risk. Would this math have an effect on your thinking?

Dunn Werking
15 days ago
Reply to  DAN SMITH

Dan,
The short answer is “No”.
A more detailed response: I actually retired at the end of 2019. As part of my “Bucket” approach, when I rebalanced in 2020, I actually bought equity index funds as part of my annual rebalancing (wish I had done it earlier in 2020). In fact, $100,000 invested in Feb. 2020 just before COVID hit is worth over $250,000 today (with dividends reinvested). I rebalanced well below the Feb level.
The “Bucket” approach allows me to essentially “self annuitize” by having progressive buckets with different timeframes and investment mixes. The timeframes are long enough that I don’t lose sleep over downturns and just rebalance equity/bond mix in each bucket once or twice a year.
I guess you could say in retirement, I just keep doing what I have done since starting to invest in the mid 1980’s. Starting with the 1987 equity downturn, I rebalance into downturns by adding equities when the equity % drops below target. The only major downturn I have not rebalanced into since 1987 was 9/11. I was too consumed at work in the aftermath for months and did not want to benefit / profit off of that catastrophe.

DAN SMITH
15 days ago
Reply to  Dunn Werking

I understand, thanks, Dunn

Rick Connor
18 days ago
Reply to  Dunn Werking

This is very well framed. thanks

Mike Gaynes
20 days ago

I think Barron’s is wrong. I think both poor health and loneliness are much bigger fears for most seniors than running out of money. They certainly always have been for me, even when I didn’t have much saved.

Larry
19 days ago
Reply to  Mike Gaynes

I agree completely with you and Marilyn’s comment. The sad truth is that money can’t buy health or eliminate loneliness

Donny Hrubes
18 days ago
Reply to  Larry

Well Larry, the use there of can bring some satisfaction. A famous ‘money guru’ tells of after building a large pile of wealth, you can have the ‘most fun you’ll ever have with money’ …
‘You can be outrageously generous.’

I follow in the Bible, Matthew Chapter 6, verse 1.

Marilyn Lavin
19 days ago
Reply to  Mike Gaynes

I agree. Somehow I think I’d manage if I ran out of money— but without health and friends, I might be better off dead.

mytimetotravel
20 days ago

I have always based financial planning on the basis I would live to 100 – I have reasonable odds of doing so, as one grandparent missed 100 by two weeks and another by five years. Of course, since I just turned 79, that means I am now planning for fewer years going forward. That expectation is why I waited to 70 to take Social Security, as I wanted the largest possible basis for future COLAs, which are sadly missing from my pension. I see no point in an annuity with no inflation protection. Since I am now living in a CCRC, my expenses will actually increase over time as the monthly fee goes up each year.

Jack Hannam
20 days ago
Reply to  mytimetotravel

Sounds both simple and smart to me.

bbbobbins
20 days ago

Social security and a paid off home are the biggest hedges people have against excessive longevity.

I think it’s perfectly reasonable e.g. for a male without excessive longevity markers in family history to regard 90 as a backstop looking from age 60. Obviously health indicators will emerge in 70s and 80s to allow revision and flexing of any plans re drawdown of capital.

No-one with a decent floor of SS and housing should fear outliving their capital. I suspect a far greater issue among the planners and savers is getting them closer to dying with zero. And for the non-planners and savers, well somewhere along the line they’ve usually made their own lifestyle choices (accepting that some are dealt truly rotten cards re health etc).

R Quinn
20 days ago

A steady income stream that cannot be outlived is the only practical answer. Social Security is the core and in the absence of a pension (which is rare in the private sector now) an annuity is the key in my opinion, an immediate annuity upon retirement. Back that all up with interest and dividend income which can be used or reinvested (turned on or off) as necessary over time.

Greg Bradley
19 days ago
Reply to  R Quinn

Agreed. At age 57 we bought guaranteed income (actually income riders on annuities) deferred to start at age 70 along with SS (also delayed to age 70). Having this guaranteed income is what gave me the peace of mind to retire at age 60, knowing (well, at least believing) that we’ll never be a financial burden to our children. We funded that guaranteed income by using part of our investment portfolio (thanks bull market!) and keeping the rest 100% invested in diversified equities.

Jack Hannam
20 days ago
Reply to  R Quinn

Once retired, our annual income stream is vital. I consider an income stream composed of SSA, dividends and annuity payments to be a reasonable choice. But mindful of future inflation risk, I prefer generating our income stream by drawing on our mix of stocks, bonds (all intermediate and short term Treasurys and TIPs) and cash (Treasury bills and money markets). There is nothing preventing us from purchasing an annuity at some future time, should we wish to.

Last edited 20 days ago by Jack Hannam
DavidHLancaster
20 days ago
Reply to  R Quinn

We have utilized total return rather than interest and dividend philosophy to pay for all of our expenses in retirement for the past seven years while we await claiming Social Security and our portfolio still is at an all time high. Now we have been lucky that on average, as is its history, the markets have been up and to the right. So there is more than one way to obtain funds to pay expenses without a I&D portfolio.

DAN SMITH
20 days ago

Matt, great article, especially for the younger readers among us. I was thinking of the old-timer that said “if I knowed I’s gonna live this long, I’d a taken better care of myself”. I would add, “and saved more money”.

Ted Tompkins
20 days ago
Reply to  DAN SMITH

I love that line! I have seen it attributed to Mickey Mantle, who was greatly hobbled during his final years with the Yankees. Good old No. 7 was my idol.

Mike Gaynes
20 days ago
Reply to  Ted Tompkins

The quote goes way back farther than the Mick, who sadly drank himself to death at 63. Both journalist Billy Noonan and jazz legend Eubie Blake used the line well before Mantle.

Jack Hannam
20 days ago

We cannot predict the future of course, so we look at probability theory. Many focus on the probabilities of various outcomes, but not always on the impact of a low probability event, should it happen. So, we must take into account both likelihood and consequences. Following the well known “4% Rule” is supposed to fund a 30 year retirement. If the residual portfolio balance drops to zero, but only after those 30 years it is counted as a success. Not good though if the person or couple who followed that plan is still alive after that time period. I’m a fan of Bill Bernstein, and recall his discussion of Pascal’s Wager, which covers this. A 65 year old just beginning their retirement has an average remaining life expectancy of about 19.7 years (call it age 85). But, that is average. The probability of that same person living to 95 is about 10-15% for men and 15-21% for women. So its little wonder that many prefer to deal with the risk of living a long time by spending less, thus leaving a larger estate behind should they not make it to a very advanced age.

Excellent article, Matt! I agree that maximizing SSA is a sort of partial longevity insurance (not withstanding what the government does to stabilize its finances). And when I retired at 65, I assumed a 40 year retirement as a sort of margin of safety.

baldscreen
20 days ago

My mom had a stroke and was unable to stay in her home anymore. It has been 5 years now that she has been in assisted living. She has gone through some of her assets, and is getting close to having to touch the principal of her final asset. I do not handle her finances, one of my siblings does. I have mentioned to my sibling that we need to start talking about next steps, but she is not listening. I get what you are trying to say, Matt, our family is living this. Chris

Ormode
20 days ago

The type of people who read articles about financial planning often have the opposite problem. They retire at 62 with $3 million, and die at 94 with $10 million. Some of them spend a lot of money in retirement, too.

DAN SMITH
20 days ago
Reply to  Ormode

It’s true, Ormode. We’re just going to have to figure out ways to spend more, but not so much that the well runs dry before we do.

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