Do you have fears of running out of money in Retirement?

Do you have fears of running out of money in Retirement?

March 19, 2021

Tips to avoid one of the biggest retirement fears that many of us have

Investment volatility, rising healthcare costs, and increased taxes are all unknowns we face during retirement. Retirement is a major milestone that brings many life changes and unknowns but one thing that might not change is a fear of running out of money.  In fact, one of the most frequently reported retirement worries is outliving savings and investments. This is particularly true of women who often relate that they do not want to become “bag ladies”.

What can you do? Here are seven areas that you can take action on that can help preserve your funds and reduce your worry.

You could go broke in retirement if:

You Abandon Stocks

Stocks are clearly risky. 2020, what a great example of the wild ride that stocks can go through.  When experiencing this, some investors in retirement may be inclined to move money out of stocks to preserve their wealth. 

But that would be a mistake.

Without stocks, you might not get the growth that you need. You need your money to continue to grow through those 20 to 30 or even 40 years of retirement to outpace inflation and help maintain your lifestyle.

You Spend Too Much Money

Spending too much, especially in the earlier years of retirement can have a very negative effect on your portfolio because you will have less money to grow over time in the stock market.  Have a budget and know what safe distribution rates are for your age.  Staying within these guidelines will help your portfolio last.

You Abandon Insurance

Saving costs on insurance may not be your best options in retirement.  From health insurance and personal car/property insurance, these continue to be areas of exposure.  In fact, having adequate health coverage is essential to helping prevent a devastating illness from wiping out your retirement savings. And don't just think about health insurance either.

Whether you want to admit it or not, our chances of having a car accident increase as we get older. And one car accident-related lawsuit could drain your retirement savings.

You Plan on Just One Source of Income

In retirement, having multiple income streams is almost always better than just one. Most retirees will have a private pension or Social Security as their primary source of income.  But is there a chance that either of these may not be as secure as desired?

When you include each of the above income streams along with what you saved for retirement, in 401(k)s and IRAs, then you have more stable and diversified income streams to rely on in your retirement years.  Annuities may also be another option to add in an additional source of income.

You Forget About Taxes

Ok, maybe this mistake won’t make you broke, but without a smart withdrawal strategy you will end up paying more taxes than you should. Retirees have many opportunities depending on their situation.  Typically using a variety of distribution strategies can result in lower lifetime taxes than following some more traditional suggestions. Combining taxable account distributions with IRA or Roth distributions can provide for some helpful tax savings if you can take advantage of lower tax brackets.

You Don’t Account for Where You Live 

Where you live impacts what you pay in taxes big time. That's why so many people move to Florida and Arizona after they retire. Besides the sunshine, both states have favorable tax environments for retirees.  Listed tax rates are not the only factor to review because many states have hidden benefits for retirees.  Many people do not realize that Illinois does not tax any retirement income like pensions and retirement account distributions.  Other states also have extra deductions for retirees.  Don’t forget to review the tax laws if you are planning on relocating.

You Rely Exclusively on Bonds

Trying to generate all of your income needs from Fixed Income is almost not possible in today’s environment of today’s low (or no) interest world of bank accounts and fixed income investments (Bonds).   

And bonds might well be headed for trouble. If interest rates finally rise from today’s historical lows, which is likely, bond values will decrease – maybe even substantially. You could end up with a big loss after just a small increase in rates.

Consider a Financial Planner

Running out of money is a real fear in your retirement years. And layering on the unpredictability of investing, you might ask yourself how you prepare your retirement portfolio for all of it? Well, one major key to successful planning for your retirement lies in following the previous strategies.

A Financial Planner understands these strategies and is great source for information about how to handle your money as you manage your retirement.

Our Motto – Live Fully! Plan Wisely!

This commentary was created by Aspire Planning Group and is for informational purposes only. The views expressed are based on current market conditions and are subject to change. The commentary does not take into account any investor’s particular investment objectives, strategies, tax status, or time horizon. There are no assurances that the techniques and strategies discussed are suitable for all investors or that the predicted results will occur. The commentary does not constitute investment advice, tax advice, or legal advice. All investments are subject to risk, and past performance is no guarantee of future results.
Aspire Planning Group, LLC is a d/b/a of HighPoint Advisor Group, LLC (HPAG), a registered investment advisor. For current HPAG information, please visit and search by CRD#163768.