[For more, read, "Juggling Your Finances in a Recession."]
High-earners have less to worry about. While people who earn above-average income during their working lives tend to have acquired more resources than those who earn less, they also need more money in retirement in order to maintain their lifestyle. Hurd adds that another challenge for wealthier individuals is that they pay much heftier taxes, a factor many people forget to take into account.
Retirees should maintain their wealth until age 100. You can't go wrong saving too much, but Hurd says it's reasonable to look at more realistic survival rates. He defines a household as "adequately prepared" for retirement if it has a five percent or less chance of outliving its resources if it reduced its initial spending by 15 percent. By that definition, 83 percent of couples and 70 percent of single people are prepared.
Annuities are too expensive. Hurd says that more people should consider annuities as a way to ensure they maintain their wealth as they age. Annuities, or contracts with insurance companies that allow consumers to purchase a guaranteed income stream, tend to be under-used because people hesitate to pay a large lump sum now for a payout much later. "In my view, individuals are likely distrustful that the annuity will be there in 25 or 30 years when it is needed," says Hurd. But, he adds, "even partial annuitization would reduce the burden of managing the level of spending and the portfolio."