When Will You Run Out of Retirement Money?

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While a retirement financial shortfall is of greatest concern to those in the lowest income brackets, there is still a risk of high-income earners being unable to sustain their lifestyles after retirement.

While a financial shortfall is shown to be of greatest concern to the portion of the population in the lowest income brackets, there is still a great risk of some of the country’s highest earners being unable to sustain their lifestyles after retirement.

The study, conducted by the Employee Benefit Research Institute (EBRI) and published in a recent edition of EBRI Notes, points to several factors that can contribute to retirees exhausting their savings soon after leaving the workforce. Working in conjunction with the Kansas Insurance Department, the EBRI looked at factors including longevity and post-retirement risk when determining financial stability of retirees.


The trends show particular difficulties for people in the lowest income brackets with 43%, or 2 in 5, expected to run short of money in just their first year of retirement. That is compared to the 5% or less of people in the top 3 brackets who were seen to run short in the first year. Those numbers increased dramatically in the tenth year, when 72% of people in the lowest brackets ran out of the money they had saved for the future.

For people in the higher brackets, there were signs of stabilization after a decade away from their jobs as fewer than a fifth in the second bracket, 7%in the third group and just 2% in the highest bracket were shown to have exhausted their savings.

Assuming a retirement age of 65, by the time retirees in the lowest bracket reach the age of 85, 4 in 5 are predicted to have run out of money. That compares less than favorably to 38% in the second income bracket, 19% in the third and just 8% in the highest earners.

There were several factors cited by the EBRI that contributed to people affording retirement including the costs of medical and nursing care.

“As the results across multiple scenarios and assumptions show, those in the lowest-income group are the most vulnerable—they are by far the most likely to run short of money in retirement, and to do so fairly quickly,” EBRI research director Jack VanDerhei, who wrote the report, said in a statement. “But the high-incomer are also at risk.”