Why you can not afford to retire

Maintaining your income after retirement still matters. Retirement is often pictured as a time when work stops and savings take over. For some people, that’s possible — especially if they have built substantial retirement assets.

For example, having $2.5 million saved for retirement puts someone far ahead of most Americans. Yet even with strong savings, financial security in retirement depends less on the balance itself and more on how money is managed over time.

One of the most overlooked strategies for financial stability in retirement is maintaining some form of income. Let’s explore why. Savings Alone Are Not Always Predictable.

Financial planners often reference the 4% withdrawal rule as a starting point. Under this model, someone with $2.5 million might withdraw about $100,000 in the first year, adjusting slightly each year for inflation.

If investment returns remain steady and inflation stays moderate, savings might last 30 years or more.

However, this model has limitations:

• It’s based on older market assumptions

• It does not account for taxes

• It assumes consistent spending patterns

• It depends heavily on market performance

In reality, retirement rarely follows a perfectly predictable path.

That’s why having ongoing income streams can provide stability that savings alone may not.

What are some of the risks that can shorten well-funded retirement savings accounts from the pressure of real-world challenges.

Healthcare costs - Assisted living costs reached a national median of nearly $71,000 annually in 2024, and healthcare expenses often rise faster than inflation.

Inflation - When prices rise faster than investments grow, retirement withdrawals lose purchasing power.

Market volatility - Taking withdrawals during market downturns can reduce long-term portfolio growth potential.

Longevity - On average, a 65-year-old in the U.S. may live nearly 20 more years, and many live longer. Retirement could last 25–30 years or more.

Estate goals - Leaving money to children, charities, or others may reduce how long savings last.

These realities make retirement less about “stopping income” and more about managing financial sustainability. This is why I believe you are to young to retire if you are healthy. I will explore this topic further on Thursday.

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