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5 Reasons Why Your Retirement Savings Might Not Last Long Enough

If you live for 20 years after you retire, you will need $100,000 to $120,000 just for your medical expenses, and that number does not include a significant medical event like a stroke, heart attack or cancer.

Even if you worked hard, lived frugally and saved faithfully for your retirement, there are several things that could sabotage your plan for having enough money in retirement. Some of these factors are outside of your control, but for others, awareness can help you avoid these pitfalls. Here are 5 reasons why your retirement savings might not last long enough.

Health Care Costs More Than You Might Think

Many people assume that once they go on Medicare, they will get free medical care for the rest of their lives. Unfortunately, that is not the case. Most people do not have to pay premiums for Medicare Part A (hospitalization and in-patient care), but if you did not pay enough money into the Social Security system, you might have to pay hundreds of dollars every month just for the basic Part A coverage.

Most people do have to pay premiums for Medicare Part B, which pays for doctor bills and outpatient care. Original Medicare does not pay for prescription drugs, so if you want coverage for those, you will have to buy Part D coverage. Another option is to buy a Medicare Advantage plan that provides outpatient and drug benefits.

Even after you pay your premiums, Medicare often does not pay 100 percent of your health care costs. You will have to pay deductibles and copays, unless you buy a Medicare Advantage plan that covers those expenses.

Typical medical costs in retirement can total $5,000 to $6,000 a year per person for Medicare premiums, deductibles, copays, and the uncovered portion of drug costs. If you live for 20 years after you retire, you will need $100,000 to $120,000 just for your medical expenses, and that number does not include a significant medical event like a stroke, heart attack or cancer.

The Good News: We’re Living Longer

Americans are living longer and are in better health than ever before. Living to 100 or beyond is not a rarity anymore. That is the good news. The bad news is that our increased longevity means we need to save even more money, so we do not outlive our retirement savings.

When the average life expectancy was in the mid-seventies, the average person could expect to live about 10 years after retiring. Now, people need to plan on living 20 or 30 years or longer, after stopping work.

The Cost of Living

Over time, the cost of many things essential to daily living usually increase, sometimes doubling or tripling over a few decades. You cannot count on groceries, health care, housing, transportation, insurance, utilities, or other items staying at their current levels throughout your retirement.

Although Social Security retirement benefits come with a cost-of-living adjustment (COLA), your retirement savings usually do not. If you buy a disability or long-term care insurance policy, make sure that it includes a COLA provision.

Helping Your Family

It can be hard to say no if your adult children, grandchildren, or other relatives are struggling financially. People often assume that people over a certain age have a massive nest egg, but giving money to relatives and friends can erode those savings.

Where Did the Money Go?

It is just as easy to fritter away money during retirement as it was at any other point in your life. If you do not pay attention and spend mindfully, you can blow your monthly budget in the first week of the month. The mindset that you worked hard and scrimped and saved all of your life, so you deserve to treat yourself now, can get you into trouble. Make a budget and stick with it. Treat yourself to the peace of mind that comes with knowing you will have enough money to pay your bills. Find non-economic ways to pamper yourself.


AARP. “5 Threats to Your Retirement Savings.” (accessed May 22, 2019)

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