By: Michael Treece

Treece Inc

Published: Jan 1, 2025

Introduction

Imagine this: You’ve spent decades working, saving diligently, and preparing for your golden years. Retirement finally arrives. You should feel secure, relieved, and ready to enjoy the fruits of your labor. But instead, there’s a persistent worry in the back of your mind "What if I run out of money?" According to multiple studies, the fear of running out of money in retirement is more terrifying than the fear of death for many Americans. And honestly, that fear isn't irrational. In today’s economic climate, with longer lifespans, unpredictable markets, and rising costs of living, running out of money is a real risk. But the good news? There are steps you can take today to ensure your money lasts as long as you do. This article will walk you through:

Why this fear is so common (and justified) the risks traditional retirement planning often overlooks the strategies you can use to build lasting financial security.

Part 1: Why the Fear Is Real

Longevity is a Double Edged Sword

People are living longer than ever before. That’s great news in many ways, but it also means your retirement savings have to stretch further, living into your 90's isn’t rare anymore and if you retire at 65, that’s 25 to 30 years of income you need to fund.

Inflation and Rising Costs

Let’s not ignore inflation. It quietly erodes your purchasing power every single year. Even a modest 3% annual inflation rate cuts your spending power in half over 24 years. If you're not factoring inflation into your retirement planning, you may find your fixed income isn’t so comfortable down the road.

Market Volatility

Traditional retirement accounts like 401(k)s and IRAs are often heavily tied to the stock market. While markets tend to rise over the long term, they also fluctuate sometimes wildly. If a major downturn hits just as you begin withdrawing funds, the impact on your nest egg can be devastating.

Healthcare Costs

As we age, our healthcare needs increase and so do the associated costs. Medicare doesn't cover everything, and unexpected medical expenses can drain your savings quickly.

Part 2: What Traditional Planning Misses

The Withdrawal Dilemma

Conventional wisdom suggests withdrawing 4% annually from your retirement savings. But what if your portfolio suffers a major loss early in retirement? That 4% could suddenly represent a much larger slice of a shrinking pie. This is known as sequence of returns risk and it’s often overlooked.

Taxes in Retirement

Many retirees assume they’ll pay less in taxes once they stop working. That’s not always the case. If tax rates rise in the future

(a real possibility given national debt levels), your withdrawals from tax deferred accounts could cost you more than expected.

Over Reliance on the Market

For decades, the "buy and hold" strategy has been the backbone of financial planning. But retirees don’t have the luxury of waiting out market corrections like younger investors. The rollercoaster ride can be more than just nerve wracking it can be financially damaging.

Part 3: Building a Strategy You Can Count On

Step 1: Identify Your Core Needs vs. Wants

Start by figuring out your essential expenses: housing, healthcare, groceries, utilities, etc. These are your non negotiables. Once you know your monthly baseline, you can begin building a plan around securing that amount first before planning for travel, hobbies, and other luxuries.

Step 2: Build Guaranteed Income Streams

This is where tools like Fixed Indexed Annuities (FIAs) come into play. An FIA offers the best of both worlds: growth potential linked to a market index (like the S&P 500) and protection from market losses. Most importantly, you can add income riders that guarantee monthly income for life, no matter how long you live or what happens in the market.

Step 3: Use Life Insurance as a Tax Free Asset

Another lesser known strategy involves Indexed Universal Life Insurance (IUL). While its primary purpose is to provide a death benefit, it can also build cash value over time cash you can access tax free during retirement. Properly structured, this can serve as a supplemental income stream or emergency fund.

Step 4: Diversify the Right Way

Diversification isn’t just about owning different types of stocks. It means balancing your portfolio across asset classes: stocks, bonds, real estate, annuities, and life insurance. The goal is not just to grow wealth it’s to preserve it.

Step 5: Plan for Rising Costs and Long Term Care

Consider inflation protected income streams or policies that include long term care riders. You may also want to explore hybrid long term care insurance solutions that combine life insurance with LTC benefits.

Part 4: Real Life Scenarios

Scenario 1: The Market Crash Retiree

John retired in early 2008 with $600,000 in his 401(k). Then the market crashed. By the end of the year, his balance dropped to $380,000. He still needed to withdraw income, compounding the damage. He later admitted, “If I’d had a guaranteed income source, I wouldn’t have panicked or lost so much.”

Scenario 2: The Guaranteed Income Couple

Susan and Michael took a different path. They allocated part of their savings into a Fixed Indexed Annuity that would start paying them $2,000 per month for life, starting at age 67. Even though the markets dipped in 2020 and 2022, their income never skipped a beat and they slept well knowing their bills were covered.

Scenario 3: The Tax Savvy Planner

Tina used an IUL as a supplemental retirement strategy. She was able to borrow tax free from the policy during retirement while keeping her taxable income low which helped reduce her Medicare premiums and kept her taxes in check.

Part 5: Final Thoughts and Action Steps

Retirement is too important to leave to chance or to outdated planning strategies. Running out of money in retirement is not just a fear; it’s a possibility if you don’t have a plan that accounts for risk, taxes, inflation, and longevity. You don’t have to face this alone, by working with an advisor who understands both safe money strategies and income planning, you can take the fear off the table. If you’re ready to talk about how to create income you can’t outlive and protect your assets from market losses, I invite you to schedule a no obligation retirement strategy session.

📞 Ready to talk?

Click here to schedule your free consultation, let’s take the fear out of retirement and replace it with a plan you can trust.