Retirees whose savings run out or run low could face very difficult circumstances. As retirement income diminishes, they may forego medical care or suffer conditions associated with financial distress. Many would be expected to turn to local, state and federal social-services programs, including Medicaid, for assistance.

On the other hand, retirees who receive regular lifetime income (from Social Security, pensions or annuities) could lead remarkably different lives. They are more likely to have an adequate standard of living, even if they live into their 90s; live more independently (and avoid becoming a burden on others); and have the peace of mind that only guaranteed lifetime income can bring.

Exacerbating the strain on relief agencies will be the sheer number of retirees potentially at risk. The largest generation in history is about to retire and double the retiree population. The impact on already stretched social services programs will be both profound and near term if policy makers do not act to address this problem quickly.

The Good News
With the private sector and government as partners, the nation can avoid or mitigate this problem. Encouraging more savings is an important first step, but it’s not enough. Congress needs to enact legislation that will empower Americans to maintain their standard of living through retirement. Specifically, that means making it easier for them to secure a guaranteed paycheck for life through products like life-contingent annuities.

Are you at risk?