Will I Outlive My Money? What Retirees Fear Most (And Real Steps to Secure Your Financial Future)

If you've ever laid awake at night wondering whether your retirement savings will last as long as you do, you're not alone. This concern, known as longevity risk, keeps nearly half of all American workers up at night, and for good reason.

Recent studies reveal that 45% of workers fear they will outlive their savings and investments. Even more sobering: nearly 40% of current retirees risk depleting their savings during retirement, especially those who live into their 90s. (Source: Kiplinger) With Americans now living longer than ever before, retirement can span 25 to 30 years or more, making this fear both understandable and financially justified.

As believers, we're called to be wise stewards of the resources God has entrusted to us. That includes planning thoughtfully for the years when earned income stops but living expenses continue. The good news? With proper planning and strategic action, you can build confidence in your financial future while honoring biblical principles of stewardship.

Why This Fear Has Grown So Dramatically

The retirement landscape has fundamentally changed from previous generations, creating new challenges that our parents and grandparents never faced.

The pension shift: Traditional pensions, which provided monthly income for life, have largely disappeared. Today's retirees must rely primarily on 401(k)s, IRAs, and personal savings, placing the responsibility for retirement income squarely on individual shoulders.

Longer life expectancies: While longer lives are a blessing, they create financial challenges. Many people now live well into their 80s and 90s, requiring decades of retirement income rather than the 10-15 years previous generations experienced.

Rising healthcare costs: Medical expenses continue to outpace general inflation, with long-term care costs representing a particular concern for many families.

Economic uncertainties: From market volatility to questions about Social Security's long-term sustainability, retirees face more variables than ever before.

Inflation's silent erosion: Even modest inflation rates can significantly erode purchasing power over a 20-30 year retirement period.

These factors combine to create what financial professionals call longevity risk, the possibility of living longer than your money lasts. Understanding this risk is the first step toward addressing it effectively.

Practical Steps to Secure Your Financial Future

While every situation is unique, there are proven strategies that can help build confidence in your retirement security. These approaches focus on what you can control while preparing for various scenarios.

Create Multiple Income Streams

Relying on a single source of retirement income, whether that's Social Security, a 401(k), or savings, puts unnecessary pressure on that one source. Instead, consider building multiple income streams:

Dividend-focused investments: Quality companies with long histories of paying dividends can provide regular income that may grow over time. However, dividends can be reduced or eliminated.

Real estate considerations: Approaches such as rental properties or other real estate exposure can potentially provide income and inflation sensitivity, though like all investments, they involve risks.

Part-time work or consulting: Many retirees find fulfillment and additional income through reduced work schedules or consulting in their areas of expertise.

Implement Strategic Withdrawal Plans

How you withdraw money from your retirement accounts can significantly impact how long your savings last. Common strategies include:

The 4% rule as a starting point: This guideline suggests withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation annually. While not perfect for every situation, it provides a useful framework for initial planning.

Bucket strategies: This approach involves organizing your investments into different "buckets" based on when you'll need the money, immediate needs, medium-term goals, and long-term growth.

Tax-efficient withdrawal sequencing: Understanding which accounts to tap first can help minimize taxes and extend the life of your savings.

Consider Income Planning Options

While not appropriate for everyone, structured approaches to retirement income can provide clarity and help align your resources with essential expenses:

Delayed Social Security benefits: For each year you delay claiming Social Security beyond full retirement age (up to age 70), your benefit increases by approximately 8%.

Build Inflation Protection

Over a 25-year retirement, even modest inflation can significantly erode purchasing power. Consider these approaches:

Growth-oriented investments: Historically, stocks have provided better inflation protection than bonds over long periods, though with greater short-term volatility.

Treasury Inflation-Protected Securities (TIPS): These bonds adjust their principal value based on inflation, providing direct protection against rising prices.

Real assets: Real estate, commodities, and other tangible assets have historically provided some inflation protection, though past performance doesn't guarantee future results.

Plan for Healthcare and Long-Term Care

Healthcare costs represent one of the largest unknowns in retirement planning:

Health Savings Accounts (HSAs): If available, these provide triple tax advantages for healthcare expenses and can serve as additional retirement savings after age 65.

Long-term care planning: Whether through insurance, savings, or family planning, addressing potential long-term care needs is crucial.

Medicare supplement planning: Understanding what Medicare doesn't cover and planning accordingly can prevent unexpected expenses.

The Importance of Professional Guidance

While these strategies provide a framework, every retiree's situation is unique. Your risk tolerance, health status, family circumstances, legacy goals, and values all influence what strategies make sense for your specific situation.

Market conditions, tax laws, and product features change regularly, making ongoing professional oversight valuable. A qualified financial professional can help you:

• Model different scenarios based on various life expectancies and market conditions

• Navigate the complex rules governing retirement accounts

• Coordinate your financial plan with estate planning and tax strategies

• Adjust your approach as circumstances change

• Ensure your financial decisions align with your values and faith

  
  

Take Action Toward Financial Confidence

The fear of outliving your money doesn't have to control your retirement years. With thoughtful planning, strategic implementation, and ongoing adjustments, you can build a retirement strategy designed to provide both financial security and confidence in your future.

At Matt25 Capital, we understand that retirement planning involves more than just numbers, it's about aligning your financial decisions with your values and creating a legacy that reflects your faith. Our approach integrates biblical stewardship principles with sound financial planning to help you navigate retirement with confidence.

Every retirement situation is unique, which is why cookie-cutter solutions rarely work. We take the time to understand your specific circumstances, goals, and concerns, then develop personalized strategies designed to address your individual needs.

Don't let the fear of outliving your money rob you of the joy and peace your retirement years should bring. Contact our team today to schedule a conversation about your retirement security. Together, we can develop a plan that honors both your financial needs and your faith, giving you confidence to embrace the future God has planned for you.

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The information provided in this blog post is for educational purposes only and should not be considered as personalized investment advice. All investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Please consult with a qualified financial professional to discuss your specific situation and needs.