Article
Retirement Killers
Things That Deplete Retirement Savings
Most people look forward to retirement in their later years. It is wise not to leave your retirement quality of life to chance. Even a basic plan will go a long way in ensuring that you do not outlive your financial resources. Here are the most common killers of financial resources for retirees. Besides lack of preparation, there are things that can erode what you have saved for retirement.
Several factors can erode retirement financial resources, potentially compromising the stability and security of one's retirement income. Accumulated funds can be depleted rapidly by the factors below.
Servicing debt rapidly depletes available funds. (credit cards, personal / revolving loans, automobile loans, mortgages etc.)
Over time, the rising cost of goods and services (inflation) can diminish the purchasing power of fixed retirement incomes, making it more challenging to cover everyday expenses.
Liquid cash is not able to keep up with inflation, so its purchasing value goes down over time.
As retirees age, medical expenses tend to increase. Unexpected health issues or long-term care needs can lead to significant financial strain if not adequately planned for. Prolonged or unexpected health issues can be costly, having insurance is highly recommended, but can be costly itself.
Investments in stocks, bonds, and other financial instruments are subject to market fluctuations. Economic downturns can negatively impact retirement savings, particularly if withdrawals are required during periods of decline.
Experiencing a loss which is under covered by insurance. Property and Casualty insurance is discussed in more detail in another article.
Outliving one's savings is a significant concern for many retirees. Longer life expectancies increase the need for a sustainable income stream that can support living expenses for an extended period. The longer you live, the more money that is needed. This makes the instruments that provide lifetime income attractive.
Withdrawals from tax-deferred accounts such as 401(k)s and IRAs are subject to income tax. Changes in tax laws or unexpected tax liabilities can reduce the net income available to retirees.
Unplanned expenses, such as home repairs, family emergencies, or legal fees, can quickly deplete retirement savings if not anticipated and budgeted for.
Many seniors are targeted by people relying on the sympathy or naivety of seniors in order to extort money from them with false causes or promises of money in exchange for a fee. The scams are continually becoming more sophisticated.
Page Last Updated: 15 June 2025
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