Overcome Your Fear of Outliving Your Retirement Assets

Alarm clock and money coins - time is money concept

If you are among the millions of people worried about running out of money during retirement, there are steps you can take now to improve your financial picture for an extended retirement and a long and healthy life.

According to the TransAmerica Center for Retirement Studies, longevity risk is the top retirement fear of working Americans. As life expectancy has increased while retirement savings has decreased overall, people are relying on less money for a longer period of time in retirement.[i]

Fortunately, there are many strategies, investment vehicles and practical steps that can be implemented to avoid outliving your money.

  1. If you are still within your accumulation phase (your working years), make sure that you are maximizing opportunities for tax-deferred savings through workplace retirement plans.
  2. Invest in a portfolio that matches your risk tolerance and provides both opportunity and protection in order to achieve your long-term goals.
  3. Try to hold off on claiming your Social Security benefits for as long as possible in order to maximize your monthly benefit amount throughout retirement.
  4. Minimize your tax burden by drawing from your taxable investment accounts, then your tax-deferred retirement accounts, and then non-taxable accounts. Keep in mind that this strategy isn’t always right for everyone, so it is important to consider your specific circumstances, legacy wishes, and financial needs.
  5. Consider insurance vehicles that, through a contractual agreement, can guarantee income such as a whole life insurance policy, annuity or reverse mortgage.

With all of the opportunities available to enhance your retirement readiness, you’ll still come across obstacles that can make achieving your retirement goals difficult. Knowing how to keep a well-balanced portfolio, developing a solid distribution plan for your retirement funds, how to protect your survivors when you pass and making sure that your investments are working hard for you can be overwhelming. As registered investment advisors we specialize in managing and helping to grow and protect wealth for our clients.

The Quandary: One or even two sources of retirement income won’t be enough.

If you’re looking to enjoy a certain lifestyle during retirement, it’s likely you will need multiple sources of income. Relying solely on Social Security will not be enough. Just consider the average monthly Social Security check is $1,406.91, or $16,882.92 a year.[ii]

Investments, workplace retirement accounts, housing, and inheritances will also come into play as possible sources for retirement income. Choosing which assets and accounts to tap first, and which ones you should try to preserve, is the next obstacle you’ll face. Your decision can impact how much you pay in taxes and what you may be able to pass along to a spouse or other family members after you pass away.

The Challenge: Higher yields come with greater risks.

If you’re a conservative investor, you know well what’s happening with interest rates: they’ve been on a downtrend for many years. Even with the prospect of Federal Reserve rate hikes, longer-term yields on bonds and savings accounts haven’t risen all that much.

This long spell of low-interest rates has crunched conservative investors, many of whom typically look to low-risk savings accounts and bonds as a relatively safe place to earn income. The yields available in these low-risk savings accounts haven’t offered much to income-seeking investors. Many have ventured into riskier segments of the bond market and took on more risk in pursuit of higher yields.

Some options to consider.

Look beyond bonds for income. One option you can consider is to adopt a total return strategy, rather than seeking income. Adding an allocation to dividend-paying stocks offers a way to diversify a total return portfolio. But keep in mind these stocks have historically had a close relationship with interest rate changes—prices for dividend stocks fall when rates rise, as investors are attracted to the higher yields available in relatively less risky bonds.

Another option to consider is to withdraw assets when you rebalance your portfolio. Instead of exchanging investments to return to your target allocation, you could instead sell assets that have appreciated and return that allocation back to its target level. These appreciated assets will often be stocks and equity holdings, so reducing this allocation can also help you keep your exposure to risk in check.

Before you make any move, talk with a financial advisor to assess your goals and consider your options. As independent financial advisors, Retirement Evolutions is here to help. You can call us at 520-399-6340 or email us at info@retevo.com to schedule a retirement plan review and learn about strategies that can help peace of mind and clarity in your retirement picture.


Transamerica Center for Retirement Studies, 16th Annual Transamerica Retirement Survey. August 2015. https://www.transamericacenter.org/docs/default-source/resources/center-research/16th-annual/tcrs2015_sr_16th_compendium_of_workers.pdf

“Median retirement account balance drops of $2,500.” Benefits Pro, March 21, 2015. http://www.benefitspro.com/2015/03/12/median-retirement-account-balance-drops-to-2500

National Center for Health Statistics. NCHS Data Brief, No. 229. December 2015. http://www.cdc.gov/nchs/data/databriefs/db229.pdf

Social Security Administration, Monthly Statistical Snapshot, October 2015. https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/#table2

[i] https://www.transamericacenter.org/retirement-research/18th-annual-retirement-survey

[ii] http://www.businessinsider.com/social-security-retirement-benefits-by-state-2018-4