Half Of Retirees Will Run Out Of Money. That’s The Good News.
“Almost half of American households will run short of money in retirement if they stop working at 65, new research predicts,” Marketwatch reports regarding a new study released by Morningstar. I’ll give you all a moment to breath into a paper bag.
Now that you’ve recovered, let’s take a closer look at the Morningstar Model of US Retirement Outcomes, created by Jack VanDerhei and Spencer Look. The details show a much more positive picture regarding Americans’ retirement income security.
An elderly couple sit outside and enjoy a drink at a local bar in this arranged photograph taken in ... [+] the Riverside area of Norwich, Norfolk, in May, 2000. (Photo by Bryn Colton/Getty Images)
Using data on Americans’ earnings and retirement plan participation, Morningstar projects the Social Security benefits, pensions and 401(k) balances that American households will have at retirement age. Likewise, using data on retirees’ household expenditures drawn from the Health and Retirement Study (HRS), Morningstar projects how much Americans will want to spend in old age. In combining realistic accumulation and spending patterns, the Morningstar retirement model truly is a leader among efforts to project how well future seniors will fare.
The bad news is that Morningstar projects that 45% of Americans won’t be able to cover their projected retirement spending, which triggers the worrying headlines.
