World Economic Forum - Outliving your retirement savings

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RadAudit
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World Economic Forum - Outliving your retirement savings

Post by RadAudit » Fri Jun 14, 2019 1:25 pm

I saw that the World Economic Forum published a report that workers could out live their savings by a decade or more in a number of countries. That kicked off some discussion (click bait?). What got me was the sentence that the forum did not consider Social Security or other government welfare payouts in the study. Without Social Security, I'd guess I'd be in a similar situation because social security and private pensions account for about 1/2 of my retirement income. The forum argues for more government help in this area, naturally. But it does raise the question of, for planning purposes, how much of a retiree's projected income stream should be from sources other than social security and other government welfare programs?

https://www.weforum.org/press/2019/06/r ... are-worse/

https://insurancenewsnet.com/oarticle/w ... QPkXohKiUk

https://www.foxbusiness.com/personal-fi ... s-by-years
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

JBTX
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Re: World Economic Forum - Outliving your retirement savings

Post by JBTX » Fri Jun 14, 2019 2:33 pm

What would be interesting would be to know how many people have "run out of money", or what percent, when/how/why it happens, and what actions did they have to take as a result.

We talk a lot about withdrawal rates and nest eggs and hear a lot about people not saving enough and the dire scenarios, but I don't see any data, even anecdotal, of how often that happens

Is it just as simple as you run out then just live on your social security?

Topic Author
RadAudit
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Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: World Economic Forum - Outliving your retirement savings

Post by RadAudit » Sat Jun 15, 2019 9:16 am

An interesting reply from megabad on the thread "how safe are pensions in the US."
Typically, I would say that the holdings of most pension funds are significantly riskier than any index fund portfolio I would design inside of a qualified retirement plan. However, since pensions are potentially backed by the provider, the risk is almost entirely dependent on the economics and politics of the provider.

On a scale from most safe to least safe:
1) FERS federal pension
2) States w/pensions >90% funded
3) States w/pensions >70% funded AND economic growth
4) Other state pensions
5) PBGC backed pensions
6) other private pensions

I would value options 4,5, and 6 at zero in all my retirement projections if I was less than 50. If I was 70, I would value them all fully.
Helps for planning purposes.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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