What happens if you outlive your money

More from Personal Finance: Earning income after 65? Make it work for you How to start an emergency fund What we might learn from Trump's tax returns. Skip Navigation. Key Points. People entering retirement will have to devise a smart strategy of how to spend their savings. They don't want to outlive their nest egg, and they also don't want to live more frugally than they need to.

These are some time-tested strategies to make sure you don't spend too much — or too little. Here's another question worth asking: How should I spend what I have?

VIDEO Invest in You: Ready. That said, if you want to use just a portion of your savings to lock in a set monthly payment for life to, say, make sure you always have a fixed source of income to pay a fixed expense, such as your mortgage, an annuity can be a great tool. Reverse mortgages have gotten a bad rap for two good reasons.

One, they have been used as a last resort by very elderly retirees who are running short of cash, resulting in upfront fees and charges that are excessive for what ends up being a short-term loan. Reverse mortgages are complicated and can be expensive. Costs include an insurance premium of 0.

You can take the money as a lump sum, which causes interest charges to accrue on the entire balance immediately; as a line of credit, where you pay interest charges based on when and how much you tap; or as a monthly annuity for the rest of your life.

Or you can combine two of these options, getting a small lump sum up front and tapping the remaining balance either as needed or monthly. That restriction protects borrowers from using up all of the money in the early years of the loan. Skip to header Skip to main content Skip to footer. Home retirement. Making Your Money Last. Make a Plan Thinkstock. Work a Little Longer Thinkstock.

Buy an Annuity Thinkstock. Use Your Home Equity Thinkstock. Making Your Money Last retirement planning retirement.

Tax Breaks. He used government data from the U. Health and Retirement Study to track retirees born between and with assets ranging from stocks, bonds, mutual funds, real estate and CDs to savings and checking accounts. Individual homes were excluded, although people with homes and pensions stretched their savings the furthest. Those uncertainties are valid, yet many people overdo frugality, said Brett Anderson, the financial planner who urged Doug Anderson to treat himself a little.

The two men are not related. The EBRI study found conservative spending among every income group. The decrease amounts to just The largest drop in retirement nest eggs,