If you're a Baby Boomer (born from 1946 to 1964), you've probably noticed two things:
- Retirement for you doesn't look like it did for your parents
- Prices are rising faster than your investment statements
Lurking in the back of your mind is a question that wakes you up at 3 a.m.: "Will I run out of money before I run out of breath?"
The numbers look bleak
According to a report by the Seniorly Resource Center, a huge crisis lurks for many older people. They found that older adults in 41 states and Washington, D.C., will outlive their money, facing an average shortfall of $115,000.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
This translates into almost half of American households running short of money in retirement if they stop working at age 65.
This gap comes from older adults spending more than they're likely to bring in from Social Security, savings and investments. The highest groups at risk include women, Black and Hispanic retirees and single people.
Most Boomers didn't count on the surge in costs of living, health care and food, to name a few expenses. They're living on fixed incomes and conservatively invested retirement plans.
The most daunting problem is that the cost of medical care continues to increase at alarming rates.
Fidelity Investments, in its annual Retiree Health Care Cost Estimate, revealed that a 65-year-old who retires in 2025 can expect to spend an average of $172,500 on health care and medical expenses during retirement. Multiply that by two for a couple.
What's concerning is that when the research looked at all generations, it showed that 1 in 5 Americans say they've never considered health care costs during retirement.
Is there a magic number to feel secure?
The simple answer is no. You must determine that for yourself and your circumstances. You don't know how long you'll live and what sort of health conditions you will face.
A 2025 study by Northwestern Mutual projected that Americans need $1.26 million to have a comfortable retirement.
Now what?
Here's how to determine how much money you'll need — and what to do if the math doesn't look pretty.
Step No. 1: Take an honest look at your retirement math.
Determining if you'll run out of money isn't mysterious — it's math.
Estimate your life expectancy. The average 65-year-old today can expect to live 20 to 25 more years. That's a long time for your nest egg to lay golden eggs.
Know your "burn rate." Add up all your monthly expenses — housing, food, health care, travel, taxes. Multiply by 12, then by the number of years you expect to live.
Compare that rate with your assets. This includes retirement accounts, pensions, Social Security, investments and savings.
If the expenses number is bigger than your assets number, you've got a problem.
Step No. 2: Factor in the silent budget killers.
Inflation. Even at an inflation rate of 3% a year, your costs will roughly double in 24 years.
Health care. Fidelity estimates a 65-year-old couple retiring today will need about $345,000 for health care.
Taxes. Uncle Sam is still invited to your retirement party (yes, you can only count on death and taxes).
Car insurance. You can research online ways to save on car insurance. A website like Insurify can help with that process.
Step No. 3: Make your money work as hard as you do.
Guaranteed income streams. Annuities, pensions or rental income can help cover essentials.
Bucket strategy. Keep two to three years of expenses in cash or short-term bonds and invest the rest for growth.
Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.
Plan for required minimum distributions (RMDs). RMDs are the required distributions you must withdraw from tax-deferred retirement accounts every year, after a certain age, without facing an IRS penalty.
AARP has a calculator to help you figure this out so you don't get hit with a tax torpedo.
Be careful with spending on shopping/entertaining. Plan meals that you can also freeze for the future. Buy in bulk and shop with friends who can share the case of toilet paper. Plan potluck meals with friends and family.
Step No. 4: Protect yourself against the big unknowns.
Long-term care. Medicare doesn't cover long-term care. Long-term care insurance or a plan for paying for it privately is essential.
Estate planning. Wills, trusts and powers of attorney keep your assets (and your wishes) under control.
Fraud prevention. Older adults lose billions to scams every year. Set up safeguards now.
What happens if you're short of money
If your numbers aren't lining up, act now:
Delay Social Security. Each year you wait to claim Social Security benefits (up to age 70) boosts your check by about 8%.
Work longer or part-time. Extra years of income mean fewer years drawing from savings.
Take on a side hustle to earn extra money. Go online to get some ideas about how you can earn some extra money — some side hustles you can even do from home.
Trim the fat. Downsizing your home, selling a second car or reducing travel can stretch your money.
Rebalance investments. If an investing approach is too conservative, you risk not keeping up with inflation. If it's too aggressive, you risk big losses.
The bottom line
If you're a Boomer, your retirement reality is different from your parents'. They had pensions, lower medical costs and often died younger. You've got more years to enjoy — but also more years to fund.
The key is not to hope you'll make it, but to plan so you will. Consider running the numbers now and making changes before it's too late.
Your future self will thank you.
Related Content
- Are You Rich? U.S. Net Worth Percentiles Can Provide Answers
- Longevity Illustrator: Find Out How Long You Might Live
- I Thought I'd Be Set, But My $3 Million Isn't Buying the Retirement I Imagined. What Should I Do?
- More Than Money: The Hidden Toll of Financial Abuse of Older Adults
- How Do You Know You Are Ready for a Gray Divorce? 15 Yes-or-No Questions
-
I'm want to give my 3 grandkids $5K each for Christmas.You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us?A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm Retired and Want to Give My 3 Grandkids $5,000 Each for Christmas, But Their Parents Don't Want Them to Spend It All.
You're comfortably retired and want to give your grandkids a big Christmas check, but their parents are worried they might spend it all. We ask the pros for help.
-
I'm a Financial Planner: If You're Not Doing Roth Conversions, You Need to Read This
Roth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us? A Retirement Psychologist Makes the Case
A retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm a Financial Adviser: This Is How You Can Adapt to Social Security UncertaintyRather than letting the unknowns make you anxious, focus on building a flexible income strategy that can adapt to possible future Social Security changes.
-
The Stoic Retirement: Ancient Wisdom for Today’s Biggest Life TransitionA "Stoic retirement" doesn't mean depriving yourself. It's a character-based approach to life and aging that can bring calm and clarity.
-
11 Outrageous Ways To Spend Money in RetirementWhether you have excess cash to spend or want to pretend, here’s a look at 11 ridiculous ways retirees can splurge.
-
I'm a Financial Planner for Millionaires: Here's How to Give Your Kids Cash Gifts Without Triggering IRS PaperworkMost people can gift large sums without paying tax or filing a return, especially by structuring gifts across two tax years or splitting gifts with a spouse.
-
'Boomer Candy' Investments Might Seem Sweet, But They Can Have a Sour AftertasteProducts such as index annuities, structured notes and buffered ETFs might seem appealing, but sometimes they can rob you of flexibility and trap your capital.
