Running out of money in retirement has become one of the most common financial concerns in America. According to the 2025 Annual Retirement Study by Allianz Life, 64% of Americans say they’re more worried about outliving their savings than dying. And the concern is well-founded: research from the Morningstar Center for Retirement & Policy Studies found that nearly 45% of Americans who retire at age 65 are likely to run out of money before they die.
The good news is that running out of money in retirement is not inevitable. With the right planning, started early and revisited regularly, you can meaningfully improve your odds of maintaining financial security throughout retirement. Here’s what puts people at risk, and what can be done about it.
What Can Cause Retirement Savings to Fall Short?
There is no single factor. Several risks can combine to erode retirement savings faster than expected.
Market Volatility and Sequence-of-Returns Risk
Bear markets and economic downturns can significantly reduce portfolio values, and for retirees who are withdrawing from their investments rather than contributing to them, the timing of those downturns matters enormously. Selling investments during a decline to fund living expenses, known as sequence-of-returns risk, can permanently reduce the longevity of a portfolio.
This is why diversification and asset allocation are especially important in retirement. A well-structured portfolio typically balances growth-oriented investments with more stable, income-generating assets to help maintain a reliable income stream even during market downturns.
Investment Returns That Fall Short of Expectations
Many retirement plans are built around projected returns, and when actual performance falls short, the gap can be significant. This is especially true for plans based on aggressive assumptions made during strong market periods. Understanding the risk profile of every investment in your portfolio, and building in a margin of safety, is essential.
Longevity and Rising Healthcare Costs
A longer life is a remarkable achievement, but it also means retirement savings need to last further than previous generations planned for. Healthcare is one of the largest and fastest-growing expenses in retirement. According to Fidelity Investments’ 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring today can expect to spend an average of $172,500 on healthcare throughout retirement, a figure that has risen more than 4% since 2024.
For those with chronic conditions, costs can be significantly higher. The 2025 Milliman Retiree Health Cost Index projects that a healthy 65-year-old woman could face up to $313,000 in total healthcare expenses over the course of her retirement. These figures don’t include long-term care, which can add tens of thousands more per year.
Despite these realities, a 2025 Fidelity report found that one in five Americans has never even considered healthcare costs in their retirement planning. This is one of the largest, yet most correctable, gaps in retirement preparation today.
Strategies for Strengthening Your Retirement Plan
Start Saving Early and Stay Consistent
Time is the most powerful variable in retirement planning. The earlier you begin contributing to a 401(k), IRA, or other tax-advantaged account, the more compound growth works in your favor. Most financial professionals recommend saving 10–15% of pre-tax income, though the right target depends on your age, goals, and current savings. For those 50 and older, catch-up contribution provisions allow you to contribute beyond standard annual limits, providing a valuable opportunity to accelerate savings.
Consider Working Longer
Even a few additional years in the workforce can significantly improve retirement security. Working longer means additional years of contributions, fewer years of drawing down savings, and potentially higher Social Security benefits by delaying when you claim them. For many, continuing to work in a full-time, part-time, or consulting capacity into their late 60s is both a financial strategy and a source of continued purpose.
Build a Realistic Budget
One of the most common mistakes retirees make is underestimating how much they’ll actually spend. While some costs decrease in retirement, others, particularly healthcare and home maintenance, often increase. Creating a detailed retirement budget that accounts for inflation, potential long-term care needs, and unexpected expenses is a critical planning step.
Diversify Your Income Sources
Relying on a single source of retirement income creates vulnerability. A more resilient strategy typically draws from multiple sources: tax-deferred accounts, Roth accounts for tax-free withdrawals, Social Security benefits, and potentially annuities for guaranteed lifetime income. Diversifying income streams well before retirement is one of the most effective strategies for long-term security.
Closing the Gap Between Concern and Action
Retirement financial security doesn’t happen by accident. It requires deliberate planning, honest projections, and consistent action taken over time. The risks are real, but none of them are unmanageable with the right strategy in place.
Yet only 23% of Americans who worry about running out of money have discussed that concern with a financial professional. That gap between worry and action is where the real risk lives.
At Barnum Premier Client Group, we believe that education leads to better financial decisions and that a well-designed strategy, combined with disciplined implementation, can help you move forward with confidence. The earlier the conversation starts, the more options you have, and the greater the chance that your savings will outlast your retirement.
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