6 Key Signs You’ll Run Out of Retirement Funds Too Early
Written by
Emily Fowler
Edited by
Zuri Anderson
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
The thought of running out of money in retirement keeps plenty of Americans awake at night. In a survey of financial planners by the Financial Planning Association and the Journal of Financial Planning, over 47 % of respondents rated running out of money as their clients’ greatest retirement fear, with another 22% saying it was their clients’ second biggest worry. Many also worry about affording the lifestyle they’ve worked so hard for.
These fears are real but spotting early signs of trouble can help keep retirement savings from disappearing too soon. Here’s what to look out for before it’s too late.
You’re Tapping Retirement Accounts Early
With Morningstar research predicting around 45% of people retiring at 65 could run out of money in retirement, being complacent about retirement portfolios could be a major error. Needing to access retirement savings before originally scheduled withdrawals can mean other income sources aren’t covering needs.
You’re Selling Investments To Pay Bills
Similarly, selling investments just to cover everyday bills means retirement savings aren’t stretching far enough. When savings are used this way instead of for emergencies or big planned costs, it speeds up the risk of running out of money.
You’re Using Credit Cards or Loans for Basics
When everyday costs like groceries, gas or utilities start landing on credit cards without a clear plan to pay them off, it signals that retirement income can’t keep up. Using debt to cover regular expenses can quickly get out of control and drain savings faster.
You’re Withdrawing More Than 3.7% a Year
Recent research from Morningstar recommends a safe withdrawal rate of just 3.7% annually, significantly lower than the old 4% rule. Withdrawing more than this increases the risk that retirement savings will run out too soon, especially when factoring in inflation, market downturns and longer lifespans.
You’ve Drained Emergency Funds Without Rebuilding
An emergency fund that’s repeatedly emptied for regular costs, then left empty, indicates retirement income is falling short. Without a cash safety net, even small unexpected expenses can force withdrawals that shrink retirement savings quickly.
You’re Relying Only on Social Security
According to the Social Security Administration, Social Security benefits represent approximately 31 % of annual income for people over age 65. If other income sources run dry and Social Security becomes the sole lifeline, it’s a clear sign retirement savings aren’t enough.
Running out of money is a top fear for those planning retirement, and these signs show when it’s already becoming a real risk. Staying alert for these red flags can help prompt a course correction — adjusting spending, seeking guidance or rethinking plans — before savings run out for good.
More From GOBankingRates
