Your Simple Plan to Overcome Retirement Challenges

Retirement is just around the corner, and if you’re like many Americans in your 50s, 60s, or even early 70s, you’re probably wondering: Have I saved enough? Can I handle unexpected expenses? How can I make my money last?

For those earning between $60,000 and $150,000, balancing your current lifestyle with the need to save for the future can feel overwhelming. But the truth is, you don’t need to be wealthy to enjoy a financially secure retirement. With a smart, simple plan, you can address common challenges like rising healthcare costs, ensuring your savings last, and making the most of your remaining working years.

Let’s walk through the most pressing retirement challenges—and practical solutions designed just for you.

1. Insufficient Savings: It’s Not Too Late to Catch Up

The Problem: Falling Short

If you’re like many Americans nearing retirement, your savings might not look as robust as you’d hoped. Perhaps life got in the way—raising kids, paying off a mortgage, or simply dealing with day-to-day expenses. The good news? You still have time to strengthen your financial foundation.

What’s at Stake:

• Without enough savings, you may need to rely heavily on Social Security, which often covers only 40% of pre-retirement income.
• Falling short could mean cutting back on travel, hobbies, or other retirement dreams.

A Plan to Fix It

• Make Catch-Up Contributions: At 50 or older, you can contribute an additional $7,500 to your 401(k) and $1,000 to your IRA annually. This is a great way to boost your nest egg quickly.
• Delay Social Security: If you can work longer, delaying Social Security until age 70 can increase your monthly benefit by up to 8% annually.
• Pay Down Debt: Focus on eliminating high-interest debt before you retire, so you can dedicate more of your income to savings and essentials.
• Maximize Employer Benefits: If your employer offers a 401(k) match, ensure you’re contributing enough to take full advantage of this free money.

Remember, even small adjustments to your savings strategy can make a significant impact in the final stretch.

2. Financial Literacy: Understanding Your Retirement Income

The Problem: Uncertainty About the Numbers

Planning for retirement isn’t just about saving—it’s about knowing how much you’ll need and where that money will come from. Many pre-retirees feel unsure about whether their savings, Social Security, and other income will be enough to support their desired lifestyle.

What’s at Stake:

• Underestimating future expenses like healthcare or housing could put your savings at risk.
• Without a clear plan, you may withdraw too much too soon, depleting your savings faster than expected.

A Plan to Fix It

• Estimate Your Retirement Needs: A common rule of thumb is to replace 70–80% of your pre-retirement income. For example, if you currently earn $80,000, aim for $56,000–$64,000 annually in retirement income.
• Identify Income Sources: Map out how much you’ll receive from Social Security, pensions, and any other income streams. Fill the gap with withdrawals from savings or part-time work if needed.
• Work With a Trusted Advisor: An experienced financial advisor can help you create a personalized plan and navigate complex decisions, such as the best time to claim Social Security.

Knowledge is power, and understanding your numbers can bring peace of mind as you approach retirement.

3. Rising Healthcare Costs: Preparing for the Unexpected

The Problem: Health Expenses Add Up

As you age, healthcare costs inevitably rise. For many retirees, these expenses—especially long-term care—can become one of the largest financial burdens.

What’s at Stake:

• Fidelity estimates that a 65-year-old couple retiring today will need about $315,000 to cover medical costs throughout retirement.
• Failing to plan for healthcare expenses could erode your retirement savings faster than expected.

A Plan to Fix It

• Start an HSA (If Eligible): If you’re still working and have a high-deductible health plan, contribute to a Health Savings Account (HSA). These accounts offer tax-free contributions, growth, and withdrawals for qualified medical expenses.
• Consider Long-Term Care Insurance: Policies purchased in your 50s or early 60s can protect you from the high cost of nursing homes or in-home care.
• Factor Healthcare Into Your Budget: Include premiums, out-of-pocket expenses, and medications in your retirement plan. Medicare doesn’t cover everything, so be prepared for supplemental insurance or Medigap plans.

By addressing healthcare costs now, you’ll protect your savings and reduce financial stress down the road.

4. Longevity Risk: Making Your Savings Last

The Problem: Outliving Your Money

With life expectancies increasing, many retirees face the challenge of stretching their savings over 20, 30, or even 40 years.

What’s at Stake:

• Running out of money in your later years could mean relying on family or making significant lifestyle sacrifices.
• Market downturns or unexpected expenses can make your savings dwindle faster than planned.

A Plan to Fix It

• Adopt a Withdrawal Strategy: The 4% rule is a common guideline—withdraw 4% of your savings in the first year, then adjust for inflation. However, consider working with an advisor to customize your plan.
• Use Annuities for Guaranteed Income: A fixed or immediate annuity can provide steady income, ensuring you never outlive your money.
• Diversify Your Investments: Strike the right balance between growth and preservation, such as a mix of stocks, bonds, annuities, life insurance and cash.

Planning for longevity is about creating a safety net that gives you confidence, no matter how long your retirement lasts.

5. Optimizing Lifestyle Choices for a Comfortable Retirement

The Problem: Balancing Needs and Wants

While you want to enjoy retirement, overspending in the early years can leave you financially vulnerable later on.

What’s at Stake:

Spending too much too soon can deplete your savings and make it harder to recover if unexpected expenses arise.

A Plan to Fix It

• Downsize Smartly: Consider moving to a smaller home or a more affordable area to reduce housing costs.
• Explore Part-Time Work: Many retirees find fulfillment and extra income through part-time jobs or consulting.
• Stick to a Budget: Create a retirement budget that aligns with your income sources and keeps discretionary spending in check.

A balanced approach ensures you can enjoy retirement without compromising your financial security.

Take Action Today: Create Your Personalized Plan

Retirement may feel daunting, but with a thoughtful plan, you can tackle challenges and create a secure, fulfilling future. Download our free guides, sign up for our newsletter, or reach out to a trusted independent advisor on safemoney.com. They can help you design a plan tailored to your unique goals and circumstances.

Your best years are ahead—start planning today to make them the most rewarding yet!

Looking for Guidance?

If you’re seeking personalized advice, consider reaching out to a financial professional. Get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly. If you would like a personal referral for a first appointment, please call us at 877.476.9723 or contact us here to schedule an appointment with an independent trusted and licensed financial professional.

🧑‍💼Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities.

Disclaimer:

This article is for informational purposes only and does not constitute financial, tax, or legal advice. Readers should consult with a qualified financial advisor or professional before making any decisions regarding retirement planning. Safemoney.com and its authors are not responsible for any actions taken based on this content.