Retirement or bust or both: How not to die broke

Clock and dollar sign balanced on teeter-totter

Hoping to die with some money in the bank?

Save a lot more than you think you'll need for retirement.

That's the advice indirectly suggested by a recent paper published by the National Bureau of Economic Research.

The paper frighteningly concludes that 46.1% of the people its authors studied died with less than $10,000 in assets -- even though their income at the end of life wasn't much different than in the last few years prior to retirement.

In addition, many of the households in the study had no home equity and relied almost exclusively on Social Security benefits to pay monthly bills.

Here's what you should take away from these scary stats: Even if you're following a financial planner's advice, you might not be saving enough to replace your income after retirement.

Yes, we've heard plenty about how Americans are woefully unprepared for retirement.

But this study is different in that it judged cash and other assets in the final year of people's lives rather than at the beginning of retirement.

So, if people began retirement comfortably enough and ended life broke, what happened?

Some had enough money for regular expenses but not enough to cover big financial shocks: substantial new health expenses or continuing care, for instance.

Others didn't adequately predict what activities would be important to them in retirement and so overspent on entertainment, travel, and other activities and purchases.

The study looked at households featuring singles, married couples and people who were married at the beginning of the study but who were widowed by its conclusion.

Not surprisingly, married couples who remained alive throughout the study period fared the best. And the people with the fewest assets also had the worst health.

In the past, many researchers had thought that health means wealth. After all, it's difficult to earn a living if you're chronically ill or forced to devote yourself to caring for a sick spouse.

But the people in this study were in retirement, so they weren't working very hard or maybe not at all.

That suggests that higher asset levels predict better health, perhaps by funding better-quality food, health-club memberships, sports equipment, stress-reducing vacations and access to warmer climates.

Indeed, there is a lot of conventional wisdom here.

Two people typically accumulate more wealth than one, and being widowed is a lot less financially ruinous than divorcing, particularly if you and your spouse have both stopped working.

And it's expensive to be single, funding many of the same expenses that couples shoulder but on just one income.

Even so, it's probably not worth marrying someone you can't stand to increase your chances of living your final years without substantial financial worries.

But it is worth considering what you're likely to do with your time when you're no longer working.

Find out how much those activities cost.

Save for them.

Then save for all the stuff that isn't any fun, stuff like nursing home care and home health aides and someone to mow the lawn.

Then save some more.

And don't believe the latest politician who claims there's no need for Social Security or other social safety nets.

Your golden years may depend on that help.

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