New York seniors outlive retirement savings as costs climb

Richard Drechsler, 77, is comfortable in his retirement.

The Vietnam War veteran said he has paid off the mortgage on his home in West Babylon. He collects veterans disability compensation each month and earns a pension from a phone company he worked at through his mid-50s. 

“I have a comfortable lifestyle and a roof over my head,” Drechsler said. “All I do is pay my taxes and insurance.”

Not every retiree is as fortunate. Many seniors on Long Island and across the state are outliving their savings and struggling with affordability amid rising inflation.

New Yorkers have about $670,000 saved for retirement on average — far short of the $1.12 million needed to cover expected expenses, according to an analysis of survey data published in August by Seniorly, an online marketplace connecting older adults and families to senior living communities.

“In retirement, you don’t have access to employment income and overtime,” said William Bengen, a California-based financial adviser who once lived in Brentwood on Long Island. “You can overspend sometimes and make up for it when you’re working, but when you’re depending on Social Security, annuities and pensions alone, there’s no way to get extra income if you outspend — so it’s really important to be mindful of your budget.”

Bengen is widely known in financial planning circles as the creator of the “4% rule,” a guideline that has shaped retirement advice for decades. It holds that retirees can safely withdraw about 4% of their savings in the first year of retirement, then adjust that amount annually for inflation, to make money last roughly 30 years.

He recently revised that formula, saying his updated research and a broader mix of investments show retirees could withdraw between 4.7% and 5.5% in the first year.

That means someone with $670,000 in savings could start retirement by taking out $31,500 to $36,800 in the first year — a few thousand dollars more than under the original rule. 

But even with more generous assumptions, experts say many Long Islanders still face gaps.

The region has seen the largest growth in its senior population in the state in recent years, with a 24% increase between 2013 and 2023, Newsday has reported. During that same period, the poverty rate for people 65 and older on Long Island rose 62%.

Andrew Spieler, a finance professor at Hofstra University said Long Islanders facing shortfalls in retirement "is not a new problem."

“But it’s probably become a more severe problem slowly over time,” he said.

Shifting safety nets

For earlier generations, pensions offered a guaranteed stream of income in retirement. Today, most workers must rely on their own savings — and that shift has left many older Americans more vulnerable, experts say. 

Much of that vulnerability traces back to the decline of pensions since the 1980s, Spieler said, “creating more people who need to provide for themselves.”

The number of Americans with traditional pension plans in the private sector dropped from 27.2 million in 1975 to 12.6 million in 2019, according to a 2021 congressional report.

As of March 2024, only 15% of private industry workers had access to a pension, compared with 86% of state and local government workers, federal data shows.

“Beginning over 40 years ago, many companies switched from pensions to 401(k)s,” said Ed Slott, a Rockville Centre–based financial expert who specializes in retirement planning. “This transferred both the risk and responsibility of saving for retirement from the companies to the employees. The money for retirement is more likely in a 401(k) or IRA now.”

Those accounts come with restrictions. People generally cannot tap them without a penalty until age 59½. They must begin taking minimum withdrawals at 73, according to federal rules. Social Security benefits typically start at 62, though delaying a claim increases the monthly check.

"Today’s workers need to fund their own retirement savings," Slott said. "This is true universally, but especially in Long Island where real estate taxes and other costs of living are very high compared to other parts of the country."

Even public pensions, which remain far more common than private ones, have been pressured across the country by underfunding and volatile investments. A report this year from Equable, a nonprofit that researches public pensions, found many state and local systems nationwide in fragile condition after weak investment returns.

New York’s system is among the nation’s largest and, by the state comptroller’s account, among the best managed and best funded. But unions have criticized state pension reforms passed more than a decade ago that required newer employees to contribute more and work longer before collecting benefits. Lawmakers at the time argued the pension system was financially unsustainable and the changes were necessary.

Longer lives and higher costs

Americans are living longer and their money has to stretch further. Inflation in recent years has made that challenge even harder, Spieler said. 

Long Islanders tend to outlive the national life expectancy average of 78.4 years, federal data shows. In Suffolk County, children born today are expected to live to 80, and in Nassau County, 82, according to the 2024 County Health Rankings and Roadmaps report. 

On a national level, the country has also seen around 26.36% in cumulative inflation since 2019, according to in2013dollars.com, a site that measures inflation. New York City specifically experienced around 23.6% in cumulative inflation during that period.

“It’s become very expensive for people” to live on Long Island, said Craig J. Ferrantino, a certified financial fiduciary and wealth strategist, and the founder and president of Craig James Financial Services in Melville. “It’s gotten very expensive for seniors...and yes, they’re running out of money.”

The bills that hit hardest are often unavoidable ones. Homeowners face rising property taxes. Medical costs climb as people age. Some parents give generously to their children, then struggle themselves when inflation or surprise expenses arrive, Ferrantino said.

It’s gotten very expensive for seniors...and yes, they’re running out of money.

— Craig J. Ferrantino, president of Craig James Financial Services

“The biggest fear for the parents is having their kids supporting them,” Ferrantino said, adding that, as a volunteer paramedic, he has responded to multiple calls from older residents who felt woozy after cutting back on medications to save money.

The financial squeeze can deepen when one spouse dies, Slott said. The survivor keeps only the higher of the two Social Security checks, not both, and many pensions reduce payments for widows and widowers.

"If there are no savings, then they may need help from children, or cut their living expenses, and that could mean moving to a place where the cost of living is lower," he said.

Coping strategies

With fewer pensions and more uncertainty, financial experts say retirees have to be proactive. That can mean trimming spending, finding ways to stretch savings or even working longer.

“The best way to have money for retirement is not to retire,” said Slott, stressing that retirees should build some financial cushion into their budgets. “Keep working. If you have income coming in, that’s more years you’re not spending your savings.”

That's the plan for Mike Torriero, 43, a youth wrestling coach from Sound Beach who said he intends to work for as long as he's able, although he acknowledged that's not a traditional choice.

"I love what I do," he said. "As far as the financial implications [of retirement], I'm a long way away and I'm not overly concerned with it right now." 

Retirement is more imminent for others.

Betty-Ann Crimi, 67, owner of vintage store Deja Vu on Main in downtown Babylon, said she plans to step back within the next year or two. She's looking forward to spending more time with family. 

“I’ve been here 14 years,” she said. “I have a lot of great customers, but I have two grandchildren now.”

Crimi admitted she has concerns about her future finances as prices continue to rise. She plans to rely on savings and Social Security, and may keep selling goods online.

Ferrantino said strategies like managing expenses and paying down credit card debt can help retirees stay afloat.

“Advanced planning is key,” he said, “and it’s even more key in New York.”