Don't Overlook These 5 Retirement Income Risks

Even if you've been a diligent saver, any of these often-overlooked dangers might pose a threat to your future happiness.

(Image credit: © Dan Brownsword 2012)

If you go to a retirement seminar looking only to score a free dinner, that might be all you’ll get.

Thank goodness, that’s not why a lot of people attend. They truly have questions and concerns, and hope to get some good guidance and direction.

Following a recent free workshop my partner and I held on tax reduction and retirement income, a gentleman approached me with a puzzled look. He introduced himself, and it turned out he’s an executive with a well-known publicly traded company (so definitely not there for the free grub).

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He said he and his wife had been working with the same adviser for several years — a family friend, in fact — and he’d never heard about the tax-minimization strategies or the income-optimization strategies we discussed that night. It made him wonder what else might be missing from his plan.

Their questions seemed to be pointing to an uneasiness about their future financial security and possible missed tax-saving and retirement income opportunities. So I asked him, “If you went to the same doctor for a long time and he always said you were fine, but you continued to have symptoms and thought something might be wrong, what would you do?”

“I’d go to another doctor,” he said. “Or at least get a second opinion.”

We talked about the dangers many folks face when they approach or enter retirement, and I think he felt some relief that someone understood his situation at a deeper level. After deciding that it wouldn’t hurt to get a second opinion, he and his wife came in for a complimentary 57-Minute Lifestyle and Retirement Freedom Conversation. They got their questions answered and saw, for the first time, how some changes to their current plan might benefit them, their family and the causes that matter to them.

If you feel as though something isn’t quite right with your retirement plan, ask yourself if any of these often-overlooked dangers might be threatening your future happiness:

1. Your plan is too dependent on personal savings.

The “three-legged stool” of retirement income isn’t what it used to be. Many current retirees won’t receive a pension, and the second leg, Social Security, is starting to feel a little shaky. This puts most of the weight on investment savings — and that can be unpredictable. It’s not unfounded that running out of money is the No. 1 worry for today’s retirees, who expect to live longer than past generations and want to enjoy those years. If you can’t be confident in your income streams providing for all of your essential lifestyle needs and most if not all of your discretionary lifestyle needs, your plan may need some patching up.

2. You need the money in your tax-deferred accounts to cover most or all of your lifestyle needs.

A 401(k), 403(b) or IRA is a wonderful thing while you’re still working. But the same account that helped keep your taxes low when you were employed will be taxed at the highest rate — as ordinary income — when you start taking withdrawals in retirement. Many people tell me they have $1 million in an IRA, when in reality, it will be closer to $600,000 or $700,000 after Uncle Sam takes his share.

3. You have too little tax-free money.

Right now, there is all kinds of rhetoric coming out of Washington about tax reform. This is nothing new. But even if a big tax cut is passed, it’s bound to be short-lived. Medicare, Medicaid and Social Security, along with interest on the federal debt, continue to absorb a larger percentage of federal revenue. In fact, the Congressional Budget Office predicts spending on Social Security and health programs, such as Medicare, for people age 65 and older will account for about half of all federal government non-interest spending by 2046.

And typically, when the government needs more revenue, it raises taxes. The taxpayers first in line will be the wealthy top 5% — who already pay nearly 60% of all income taxes — and your untaxed retirement accounts likely will be at the top of Uncle Sam’s list. If you’re feeling like a target, some adjustments may be in order.

4. You aren’t making the most of tax deductions that will benefit you in retirement.

If you were diligent about seeking out tax savings while you were working, don’t stop now! Some of the deductions you’ve learned to count on (mortgage interest, exemptions for dependents) could go away in retirement, and you’ll have to find new ways to save. Talk to your tax professional about future tax-efficient strategies that most would consider win-wins, including giving to your favorite charity, which can often put more money in your pocket and allow you to give more to family as well.

5. You have too much investment risk.

Everything shifts when you transition from the accumulation stage to preservation and distribution. Suddenly, every investment you make carries some kind of risk, from market volatility to inflation vulnerability. If you’re feeling anxious about your investments and the next market correction and wonder if you might have to reduce your lifestyle in retirement, it may be time to reassess your financial and emotional risk tolerance.

So, what’s the next step? Take a deep breath — and ask for help. But be picky about who you go to for advice.

Look for a professional who specializes in retirement planning and works only with people who have a wealth makeup similar to yours — someone who will understand your needs, spend more time listening than talking about products and is knowledgeable about the strategies that can help get your plan back on track.

The right adviser can give you a credible second opinion — or maybe even a whole new lease on retirement life.

Kim Franke-Folstad contributed to this article.

Barry H. Spencer and Wealth With No Regrets® do not provide legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.


The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger was not compensated in any way.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Barry H. Spencer, Registered Investment Adviser
Co-founder, Wealth With No Regrets

Barry H. Spencer is a Registered Investment Adviser and co-creator of Wealth With No Regrets® (
He has appeared on national and regional programs as a financial educator, author, speaker and specialist in estate strategies and charitable giving.