Retirement at Risk: 4 Growing Challenges and How to Beat Them

Retirement Is No Longer the Finish Line—It's the Starting Point

Retirement used to be simple: Work hard, save a little, collect a pension and Social Security, and enjoy your golden years. But today? Retirement is more complex, longer-lasting, and full of hidden financial traps.

Here are the four biggest financial challenges facing today’s retirees, and practical steps you can take now to protect your lifestyle, health, and peace of mind.

1. Inflation: The Silent Wealth Killer

Retirees are learning the hard way: Inflation doesn’t retire just because you do.

Over the past few years, everyday essentials—food, housing, healthcare, and insurance—have surged in price. Even modest inflation can devastate a fixed-income plan over 20–30 years.

A 3% inflation rate cuts your purchasing power in half over 24 years. And many retirees saw real-world inflation well above that in recent years.

Why it matters:
Many retirement plans assume flat or mild inflation. But even “mild” inflation can cause you to run out of money faster than expected, especially if you're drawing from conservative investments with limited growth.

What to do:

• Consider growth assets like dividend stocks, ETFs, and real estate to keep pace with inflation.

• Delay Social Security to increase your inflation-adjusted income.

• Reevaluate your retirement budget every 12–24 months, adjusting for real costs, not guesses.

• Consider fixed assets like annuities that offer inflation protection riders

2. Healthcare & Long-Term Care: The Unseen Financial Earthquake

Most people assume Medicare will cover them, but it often doesn’t cover dental, vision, hearing, prescriptions, or long-term care.

According to Fidelity, the average 65 year old couple will need over $315,000 in retirement just for healthcare, and that doesn't take into consideration long-term care in which 70% of people over 65 will need in some form, which can cost $4,000 to $10,000+ per month.

Why it matters:
These costs are often underestimated, yet they’re one of the leading causes of financial distress in retirement. One spouse’s illness can decimate a couple’s entire retirement plan.

What to do:

• Look into Medicare Advantage vs. Medigap plans, and know the trade-offs.

• Evaluate long-term care insurance vs. hybrid annuity & life insurance long-term care policies while you’re still healthy.

• Consider funding a Health Savings Account (HSA) before retirement. It’s one of the most tax-advantaged tools available.

3. Outliving Your Money: The Longevity Dilemma

Retirement could last 25 to 35 years. And most people underestimate just how long they’ll live. Especially healthy, active adults entering retirement in their 60s.

At age 65, there's a 50% chance one spouse lives past 90. That means your retirement portfolio needs to live past age 90 as well. This is why diversification is crucial. If all your eggs are in a volatile basket, sequence of return risk, drawing income during a market downturn, can permanently damage a portfolio, and deplete it quicker then planned for.

Why it matters:
This causes stress, worrying about finances is not healthy for one, and secondly it erodes the joy out of the golden years. Statistics show that retirees who have adequate savings and guaranteed income streams live longer and have a more enjoyable retirement.

What to do:

• Create a guaranteed income floor with tools like annuities, pensions, or Social Security optimization.

• Use "bucket" or time-segmented strategies to plan income over different phases of retirement.

• Manage sequence risk by avoiding large withdrawals from volatile assets in down markets. Prioritize withdrawing from buffer assets instead during volatile years.

4. Taxes in Retirement: The Surprise Bill

Many retirees are blindsided when they realize they still owe taxes, even without a paycheck.

Social Security can be taxed.
Traditional IRA, 403b, 401k withdrawals are fully taxable.
Required Minimum Distributions (RMDs) can trigger higher Medicare premiums and push you into a higher bracket.

Why it matters:
You may retire into a higher tax bracket than you expected. And if you’re not coordinating withdrawals correctly, you could pay far more than necessary which can deplete your retirement nest egg sooner than planned for.

What to do:

• Consider Roth conversions during low-income years before RMDs begin.

• Use Qualified Charitable Distributions (QCDs) to reduce taxable income.

• Sequence withdrawals tax-efficiently. Blend Roth, IRA, and brokerage accounts to manage brackets.

• Incorporate whole life insurance into your retirement portfolio for tax free access to the cash value within.

Final Thoughts: Retirement Is a Shift, Not a Stop

The biggest risk in retirement isn’t just running out of money, it’s failing to adapt.

Smart retirees and smart pre-retirees know that what got them here won’t necessarily carry them through the next 30 years. Retirement today requires rebalancing your strategy, protecting your income, and planning proactively for what’s ahead.

Want to Stress-Test Your Retirement Plan?

Whether you’re ten years away or already retired, it’s never too late to prepare. We help individuals and couples build income plans that account for inflation, taxes, healthcare, and longevity.

Let’s make sure your money lasts as long as you do.

Schedule a free 15-minute retirement strategy call today.