June 23


The Ultimate Guide to Running Out of Money in Retirement

The Ultimate Guide to Running Out of Money in Retirement

By David Kennon, Kennon Financial

“Dave, can you give us some examples of people who ran out of money before they died?  I understand it is far less common than people think, but there ARE people who run out of money.  What mistakes did they make?”

The following stories are fictional, but they should show you where most people go wrong.


“Fast Eddie” Rosenfeld

Eddie believed in living for the moment.  If he made a dollar, he spent a dollar.  As he grew into his 60’s the stark reality started to settle in that he was going to live longer than he ever imagined.  He also began to realize that his body was not going to allow him to work forever.  Stuck living on his social security, Eddie ended up living in a van down by the river.

Bobby Boobin

Bobby saved a few hundred grand for his retired years inside of his 401k.  When he retired at the age of 65, he made a hallmark mistake.  He kept all of his money in company stock.  100% of his retirement savings were concentrated in one stock, because, hey, it made him plenty of money during his career.  Unfortunately, Bobby worked his entire life for energy giant Enron.  Enron filed for bankruptcy and Bobby ended up working at Burger King for the rest of his life.  His teenage coworkers made fun of his name mercilessly.

Libby Lotsa

Libby was always instructed by her parents to, “work hard, save your money, and don’t trust Wall St.”  So when Libby retired at age 60, she took her sizable retirement savings and put $100,000 into five different banks (that is all the FIDC insurance would cover at any one bank).  While the interest rate she received on her savings was pretty low, she figured, “At least I’m not going to lose any money.”  Libby ended up living until 98.   Without utilizing the incredible power of stocks and bonds, Libby found herself eating into her principal to pay her bills.  Late into her 90’s she got perilously close to running out of money.

Joey Walnut

Joey, a dog catcher for a suburban town outside of Detroit, was able to cobble together $500,000 in retirement savings.  Having invested his money in a diversified portfolio of stocks and bonds, Joey’s lifestyle was easily supported by the dividends and interest.  At age 83 Joey started showing the signs of dementia.  By age 85, Joey was confined to a nursing home with Alzheimer’s, and he lingered for twelve years before he passed away.  By the 8th year, paying out $120,000 a year for care, he had exhausted his savings.  At age 93, Joey, who had long ago lost touch with any semblance of reality, ran out of money.  He went onto Medicaid (not that he had any understanding of what that meant).  Dave’s Quick Tip:  Government statistics show that the chances for needing 5 years+ of care in a nursing home are 7% for men and 2% for women.  In other words, Joey was in the vast minority. One of the unlucky ones….


Ok, I have to be honest here.  I’m having a hard time coming up with scenarios where people run out of money.  Minus the Great Depression Part 2, it is just not an especially realistic scenario.

If you don’t save any money or if you have suffocating amounts debt- then YES, your retired years will not be as luxurious as to what you are accustomed.

But the entire fabric of our society it built upon protecting the elderly from ending up on the streets.  Medicare covers medical costs.  Social Security covers basic living expenses.  Medicaid covers nursing homes.  Even if you do “run out of money,” it doesn’t mean you will be living on the streets or dying in the gutter.

But what if you end up being a burden to your kids?!

So what?  If my Mom needed my help, I would gladly have her stay with me.  “Being a burden” often times turns into “fostering a new and improved relationship with your family.”

So in conclusion, if you have a reasonable budget and have accumulated some modest savings, you won’t run out of money!

If you find yourself saying, “I am not going to spend any money because 30 years from now I may not have enough money to pay the nursing home,” stop it!  It’s a crazy way to live.

Like I keep saying, the biggest mistake many retirees are making today is not spending enough money early in their retirement.  The world is your oyster!  Go out and grab your pearl!

Be Blessed,


P.S.-  Here is another great article outlining why you do NOT need $1,000,000 to retire.


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The value of fixed-income securities may be affected by changing interest rates and changes in credit ratings of the securities.

 Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index.  Actual results will vary.

This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel.


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