We can generally deduce that life in the United States is being extended because of the outcomes of preventive and curative medical services of today. If you were to have an extended life it is possible that you will deplete your retirement savings. This means you will only have Social Security and Medicare to rely on for your living expenses.
Post-World War II most companies provided defined-benefit pension plans for employees’ retirement which guaranteed a certain payout amount monthly based on an employee’s years of service and compensation. But by the late seventies and early eighty, there was the realization of earlier rumors that corporations had not properly funded their pension liabilities to fund monthly payments to retired employees.
Consequently, this ship transferred the responsibility for managing retirement income and the longevity risk from employers to retirees. The results are employer may/or may not match a portion of the employee’s contributions in such plans as 401(k) plans, 403(b) plans, 457 plans, and Thrift Savings Plans. Now employees make the bulk of the contributions to the plan and direct the investments within it.
Additionally to Social Security benefits to supplement the pension, we are encouraged to take advantage of Individual Retirement Account (IRA), Roth IRA, savings, investments, &, etc… for the stability of income in retirement years.
With the shift to defined-contribution plans is the fact that it’s impossible to know just how long any individual will live, and how long their savings must last in retirement.
The CDC’s longevity statistical ages are averages reveal many people don’t live to their longevity age, of course, that also means that many people live much longer. This conundrum can result in retirement funds being deleted retirement when we need it most.
The question becomes how much can you spend in any given year for your pot of money without depleting that pot of money as you live into longevity. With retirement saving many retirees freely spend until they get shocked by the reality that virtually out of money to continue funding their retirement needs.