Do You Have Enough Money Saved for Retirement?

Updated on June 20, 2022
Todd Erkis Photo 2
Todd Erkis

The Secret to Having a Retirement You’ll Enjoy

Approximately four million people in the U.S. retire each year,1 and most of them spend a majority of their adult lives saving money to last through their retirement. Some may even use a tool like this calculator from investomatica to help them work out when they will be able to retire. But shouldn’t people focus on how they can enjoy retirement, rather than just endure it?

When planning for retirement, many people are uncertain of what it will entail, and this uncertainty can prevent them from properly preparing their finances. Once they do retire, many hope they have saved enough, but don’t know for certain whether they’ll avoid running out of money during retirement, becoming a burden on their children, or having to live off of social security from the government. This leads some to delay retiring, underspend during retirement, or worry the whole time. With so much uncertainty, how are people supposed to enjoy retirement?

In his new book, What Insurance Companies Don’t Want You to Know: An Insider Shows You How to Win at Insurance, insurance expert and professor, Todd Erkis, helps those planning for retirement determine exactly what they need to do to be 100% certain they will never outlive their retirement savings. He uses the principles of insurance to the benefit the retiree, without tricks, investment schemes, crazy strategies, or the need to be independently wealthy for it to work.

Once a retiree has the peace of mind of being financially protected for their entire lifetime, they can unlock the freedom to fully enjoy their retirement years.

  1. Significant assets are needed to retire and it’s best to start saving early — According to a survey by American Funds, nearly two-thirds of Gen Xers are kept up at night thinking about financing their retirement.2 The best way to avoid fear of retirement is to plan ahead and start saving early. Deposit as much as is allowed into tax advantaged retirement accounts, like 401(k)s, before considering any other retirement savings products, like an annuity.
  2. Evaluate an annuity based on guarantees and tax benefits — Annuities are heavily marketed as a good way for people to save for retirement. But are they? People should evaluate if an annuity is right for their circumstances based on the strength of the investment guarantee and the savings from deferring taxes on income earned in the annuity. Note that the tax deferral benefit will be small if the money earns a low interest rate, the person is in a low tax bracket, or the money is in the annuity for only a few years. Annuities have significant fees, expenses, and restrictions so it’s important to get an independent second opinion before buying one.
  3. Determine the amount of income needed in retirement — The first step, when determining how much income is needed for retirement, is to analyze current income and expenses. According to financial experts, a retiree should plan on needing about 80% of their pre-retirement salary during retirement.3 Remember to include the impact of possible inflation in the amount of income needed, as the things we buy increase in cost every year. A person who has not saved much for retirement will need some combination of working longer to accumulate more for retirement and living on a lower retirement income than would be ideal in order have enough money to last through retirement, let alone enjoy it.
  4. Get professional help to best use your tax-advantaged accounts like 401(k) and IRAs — The tax rules regarding retirement savings accounts are complex, which is why many people look for assistance from retirement planning services and companies that deal with tax. Accounts range from taxable and tax-deferred to tax-exempt, and each have a different set of rules. The tax rules regarding retirement savings accounts are complex and the tax penalties can be severe if mistakes are made. There are penalties for using retirement money at too young an age, and also for keeping money too long in a retirement savings accounts or within an annuity. It is best to get professional help to determine how best to withdraw money in these tax-advantaged savings accounts during retirement.
  5. Purchase longevity insurance to eliminate the risk of living too long — The “secret” way to never outlive one’s money in retirement is to purchase insurance that will pay out a guaranteed monthly income during old age. This is especially important during the later years of life, when elderly people are at their most vulnerable and unlikely to get back into the workforce should retirement savings run out. This product, called longevity insurance, is also known as a deferred lifetime income annuity and is only available through insurance companies.
  6. Finally, enjoy retirement! — With a sound retirement plan and longevity insurance that will pay a guaranteed monthly income for life, a retiree is fully protected and the uncertainties surrounding retirement finances are removed. Having 100% certainty of never outliving one’s income in retirement allows the retiree to fully enjoy retirement.

Todd Erkis is an FSA, CERA, MAAA, and professor of finance and risk management at Saint Joseph’s University in Philadelphia. Prior to becoming a professor, he spent more than 25 years as an actuary, developing insurance products and helping set prices for insurance. His book, What Insurance Companies Don’t Want You to Know: An Insider Shows You How to Win at Insurance, provides a guide to everything you need to know about insurance and is now available on Amazon.

1 “Do 10,000 baby boomers retire every day?” The Washington Post. 24 Jul. 2014.

2 “18 scary retirement statistics,” Think Advisor. 31 Oct. 2016.

3 Matthew Frankel. “20 Retirement Stats That Will Blow You Away,” The Motley Fool. 26 Jan. 2016.


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