13 reasons you will run out of money in retirement

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by: Cory Carlton

Most people we speak with have the same goal for retirement: don’t run out of money.

That’s a good goal. But after peeling back the layers a bit we determine most people’s real goal is to not have a lower standard of living than they do now. Does that sound about right for you?

We work with people that have millions of dollars and those that wish they would have saved more. The fact is that any of these people could run out of money.

You could have done a great job saving your money and have a nice nest egg, but the fact is that money could run out.

Here are thirteen things that could cause you to run out of money. But don’t worry, we have ways to not let that happen.


Most people do not have any form of long-term care insurance. This happens for a few reasons but the fact of the matter is that having a long-term care event can wipe out your retirement savings quicker than a market crash. 

What are the odds this could happen? For women, it is 1 in 2 chances and for men, it is 1 in 3 chances. If you knew there was a high chance of something happening, wouldn’t you want to protect against it? After all, the odds of having a claim on your homeowner’s insurance is about 1 in 1200 but everyone has that coverage.

How long could you afford to pay for a nursing home? CLICK HERE to find out what the current cost of care is in your area. 

We call this kind of planning extended healthcare planning and there are several ways you can protect yourself and your family. You can use traditional long-term care insurance. There is also short-term care insurance, home healthcare insurance, life insurance can be used for this, and even your retirement savings can be properly positioned to be leveraged to cover some of these costs. 


The odds of you or your spouse making it into the 90s is 50%. Since people are living longer thanks to advances in medicine that means your retirement needs to last longer.

Not everyone’s income plan is built to last until they turn 90 years old. In fact, many of the analyses we have recently done show people will run out of money before both husband and wife pass away.

This problem is only compounded when we factor in a long-term care need with no protection and higher taxes. More on that in a moment.

By simply repositioning assets we help people make sure they never run out of money in retirement, regardless of how long they live.


So, this piggybacks off the first point but depending on what reports you read a retired couple can expect to spend between $300,000 and $400,000 on medical bills in retirement.

That is before a long-term care event.

Look at your retirement account balance and take $300,000 out of it. Do you think that would impact how long your money will last you? It sure will.

Having the right Medicare plan in place can help significantly. My grandfather told me that if he had put my grandmother on a Medicare Supplement when she was able, their retirement would have looked very different. They could have moved to middle TN and been closer to the family instead of having to move to eastern Kentucky where the cost of living was less.

Selecting the right Medicare health plan for your needs is vital to making sure you don’t run out of money in retirement. 


Most people’s retirement plans are built off of level incomes, but we all know the cost of everything is going up.

Thirty years ago a loaf of bread cost $0.73 and now it costs $2.50. I know where you buy your bread and the kind of bread you buy makes a difference but just hang with me in this example.

That is a 242% increase for a loaf of bread in 30 years. You must account for the fact that the income you start within retirement will not have the same buying power later in life. 

We will go into more detail on that in a moment. 


Things are not made the way they used to be made. At some point in your retirement, you may need to replace your roof, your car[s], your HVAC, your floor, your water heater, your septic tank, or any number of things.

You must plan for this. Just one of these things may not be an issue but what if things go out at the same time and then the market is down, and you must pull more money from your retirement account. That is bad news for your retirement and can quickly snowball and create income issues for you sooner than expected.


When you’re retired you have time on your hands, time for new activities and hobbies. Or just more of the same ones.

That means the more you do the more you spend. If you increase your traveling, your eating out, your golfing, whatever. It becomes easy to spend more in retirement without knowing it.

We’ve seen lots of retired couples that love trying new restaurants. That’s great, but it can add up. 

It’s fine if you are going to spend a little more money in retirement but you must make sure you have budgeted for that. Which we can help with.


You may be in the best financial position of your life in retirement and if you can help your kids you are going to want to. 

But make sure you know what that means for your income. It can be very easy to help your kids out and then attempt to keep it fair and before you know it you have given away more than you were expecting. 

Be aware of your generosity. 


This is what grandparents are supposed to do. You have more money now to spend on your grandkids than you did when your kids were young, so you want to not hold back. 

This can quickly get away from you depending on how many kids you have and how quickly their families grow.

Your grandkids don’t need the latest toy or game. They really prefer time with you. If you want to do something for your grandkids that will leave a lasting impression, consider putting money away for them.

You can do this in a way that you provide good growth without any risk and any money they take out is all tax-free. One grandparent is doing this for each of his grandchildren right now.

He puts $50 a month into a tax-free retirement account program with the intention of only putting money into it for 25 years. After that, no more contributions from him, or the grandkid can add to it. This grandfather wanted to get a head-start on their retirement so these programs will generate at least $30,000 a year tax-free for each of his grandkids.

Do you think his grandchildren will see the legacy he was able to leave them and their kids or do you think they are going to remember that one toy they could have had?


This is the biggest oversight in most peoples’ retirement and income plans. Taxes are going up! There is no way around it.

If you want to keep the same standard of living in retirement as you have now then at the very least your taxes will remain the same. But that is not likely either.

Taxes are going up. As of this post, the government has spent $3.5 TRILLION since COVID started. That is TRILLION. Not billion. The government knows the only way to address this is with higher taxes and they have said it will be addressed sooner rather than later. 

That means your lifetime and that means taxes are going up. So, with that tax-free retirement account program for the grandkids, you may want to consider that for yourself.

It could increase your retirement income by 60% to 80% and reduce your taxes by hundreds of thousands of dollars and there is no market risk. 

You will rest much better in retirement if a portion of your retirement is risk-free and tax-free.

Let me illustrate this another way: Look at your retirement account value in your 401K, 403B, or any other qualified account [tax-deferred]. Now take out 25% of that for taxes. That's gone. Take out another 2.5% for fees [that is a conversate number], and then another $300,000 for healthcare costs.  What are you left with? 

Taxes alone are a huge issue but add them together with higher fees and healthcare costs and it can be devastating.


One person we recently helped brought his 401K statement to us. He thought he was paying 1.5% in fees. And he was but there were other fees he did not know about. 

He was paying closer to 3.9% in fees. 

401Ks have generally higher fees with fewer options so they are not ideal to keep after you retire. If you are getting a match, use them. If not, consider using an investment advisor representative that has much lower fees and is transparent about what their fees are.

Fees can have a huge impact on your income in retirement, especially if you don’t know what they all are. 

If you need help with your investments, we have some investment advisors here at Both Hands FG. 


It is becoming more and more common for people to get a 30-year mortgage when they are in their 60s and 70s.

Sometimes you feel like it is finally time to treat yourself to a new car. 

Whether you plan to, or not new debt can trickle into your finances and impact your retirement income.


A little here and a little there can add up. When you take more out of your retirement account than planned it has a ripple effect that you won’t feel immediately, or even then next year or two. But down the road is where you will feel the impact. 

If you take more money out for income, then you have less money earning interest and that has a compounding effect on your money’s longevity. 


The market does two things, guaranteed. It goes up and it goes down. If all your retirement savings are tied to the market, then you are at its mercy as to what it is going to do.

That means things you have no control over, like a pandemic, a housing crash, a tech bubble, interest rates, etc. will play a key role in determining what your retirement looks like.

People tie their savings to the market because they feel like they must accept the risk because the alternative of getting protection will not grow your money. That’s false. You can grow your money without risking it. I’m not talking about growing by 2%, 3%, or 4%. I’m talking double-digit growth with zero market risk.

You can even create your own private pension that gives you and your spouse a guaranteed income for the rest of your lives, no matter what the market does.

We call these secure guaranteed retirement accounts and for our clients who have chosen to use one of these, they have never lost a dime due to a market correction.

Everything discussed here can be planned for and avoided. People don’t plan to fail. They fail to plan. We can help you determine how long your current retirement plan will last you and if you come up short we can make suggestions as to how to make sure your retirement lasts as long as you do.

If you want to have your free analysis completed so we can help you determine what your retirement will look like with your current plan or you want to implement a strategy to address some or all of the 13 issues discussed, feel free to reach out to us.

ABOUT THE AUTHOR: Cory Carlton is the CEO and Co-Founder of Both Hands Financial Group. He specializes in income retirement planning  using our tax-free retirement accounts and secure guaranteed retirement accounts. Safe money and tax-free money have their place in most people's retirement strategy and Cory and the rest of our team are experts in planning and implementing the right strategy for each of our clients.