7 Things Retirees Must Do If Their Savings Drop Below $100,000

No matter how prepared you are for retirement, unforeseen circumstances can lead to financial surprises and emergencies that require dipping into your savings, sometimes beyond what you’d planned to spend.

While every person and couple is unique, if your savings dip below $100,000 you may be heading toward financial trouble. 

Financial experts explain what retirees must do if their savings drop below $100,000.

First, it’s important to understand that there is no one-size-fits-all approach; the amount of retirement savings needed varies for each individual based on their unique circumstances, lifestyle and financial situation, according to Isabel Fliss, a financial advisor at McKague Financial.

Several factors play a crucial role in determining the amount of retirement savings required for an individual or household, she explained, such as Social Security and pension benefits, investment returns and risk tolerance as well as expected retirement expenses and debt obligations.

“The critical juncture in retirement savings occurs when retirees’ expenses exceed both their income and the planned withdrawals from investments, especially considering a lifespan projected to age 100.” 

However, with the golden rule of emergency savings being three to six months’ worth of the costs of your non-negotiable bills, a dip below $100,000 can bode poorly, according to Jeff Rose, CFP and founder of GoodFinancialCents.com. 

Ann Martin, director of operations of CreditDonkey, goes with a higher figure, $200,000, factoring in that “many people are living well into their 80s, which is wonderful for longevity but challenging financially.”

“The first step is to trim the fat from your budget,” Rose said. “Look at your monthly expenses and cut back on nonessentials. This isn’t about living on ramen noodles — unless you’re into that — but more about distinguishing between wants and needs. Do you really need that cable package, or can you switch to a cheaper streaming service?”

Maintaining composure and refraining from making hasty decisions about investments is also key, Fliss said.

“Retirees may find it beneficial to seek advice from financial advisors or retirement planners who can provide personalized guidance and solutions based on their specific circumstances,” she suggested. 

If the drop in savings is due to poor investment performance, retirees should review their investment strategy with a financial advisor, Fliss said. “They may need to rebalance their portfolio or consider safer investment options that prioritize principal protection and minimize risk.”

One way to determine your needs is to do an expense analysis by determining your annual living expenses, Rose said. 

“This includes regular spending on necessities, discretionary spending and potential future costs like healthcare. The difference between your expenses and fixed income — think Social Security and pension — will help determine how much you need to withdraw from savings each year.”

If your savings are low, you might need to evaluate or rearrange your investment portfolio, Fliss said, potentially shifting from riskier to safer options, to protect your principal.

“This might involve reallocating assets from high-risk investments, such as stocks, equity mutual funds with high fees or alternative investments to more conservative options like fixed indexed investments, fixed income ETFs, bonds or stable dividend-paying stocks.” 

You might also need to increase allocations to cash reserves or money market funds to provide stability and mitigate potential market volatility, Fliss said.

Erika Kullberg, attorney and personal finance expert and founder of Erika.com, suggested that should your savings drop too low, “an option to consider is freelance or part-time work to help supplement your retirement income or perhaps exploring Social Security options to see if you can strategically delay payments to give higher payments later in life.”

It’s also important to evaluate your withdrawal strategies from retirement accounts such as 401(k)s, IRAs and pension plans, Kullberg said, and consider adjusting your withdrawal rate to minimize your rate of depletion. 

“Experts recommend withdrawing 4% of the total in your first year of retirement, then adjusting each year based on inflation.”

If making up the financial difference isn’t an option, consider other avenues, according to True Tamplin, certified educator in personal finance and founder of Finance Strategists. 

“Don’t forget to explore government and community resources available for seniors. There might be benefits or assistance programs you weren’t aware of that can help ease financial strains,” Tamplin said.

“Lastly, think about family support. It’s not easy to ask for help, but involving family in financial planning discussions can open up solutions you hadn’t considered.”

While a financial shortfall can feel scary, if you take proactive steps, you can get ahead of it.