Running on Empty: Why Your Retirement Plan Might Be Closer to E Than You Think (Another Lesson From the School of Rock)
Anchoring your retirement plan to short-term inflation is the financial equivalent of your gas tank running on empty — it works great until the erosion of your purchasing power leaves you stranded miles past the last exit.
"Running on Empty" is one of Jackson Browne's most recognizable songs — a 1977 live recording that captured both the energy of the road and the toll it takes over time.
A No. 11 hit on the U.S. Billboard Hot 100 when it was released as a single, and it spent 17 weeks on the chart. Rolling Stone ranked it at No. 496 on its list of "The 500 Greatest Songs of All Time" in 2010.
The song draws on Browne's real-life experiences. He lived close enough to the studio that he figured he could always make it without having to fill his tank.
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In 1977, he wrote "Running on Empty" after routinely driving around with his gas gauge hovering near E, a few more miles until empty. Most of the time, he made it. But not always.
That's the thing about running on empty — it works … until it doesn't.
Lately, I've been thinking about how often that same mindset shows up in financial planning.
For more than two decades, we've used a 3% inflation assumption in retirement plans. For years, clients pushed back. From 2010 to 2021, they asked, "Why so high? Inflation hadn't been above 2% in what felt like forever." It seemed conservative, maybe even unnecessary.
Then came the COVID-19 crisis, and layer upon layer of fiscal and monetary stimulus from the federal government and the Federal Reserve Bank. Since 2020, inflation has averaged closer to 4% per year, and prices have risen more than 40% in slightly more than six years.
Now the question has flipped: "Why are you using a number that's so low?"
Same assumption. Completely different reaction. That's the trap. We anchor to what just happened and assume it will continue, even when history tells us otherwise.
But financial planning isn't about the last five years. It's about the next 30. Even if inflation had behaved exactly the way the Federal Reserve intended — right at 2%, prices would still be roughly 27% higher today than they were in early 2020. Instead, they're up more than 40%.
That gap matters. But what matters more is what happens next. In a 20-to-30-year retirement, even a "normal" inflation rate compounds into something much bigger. At 3%, prices double in about 24 years. The life that costs $100,000 today doesn't stay there. It becomes $150,000 … then $175,000 … then $200,000.
Now extend the timeline. We're not just dealing with inflation; we're dealing with longevity. People are living longer, and retirements that used to last 15 to 20 years are now stretching 25 to 30 years or longer.
U.S. life expectancy hit an all-time high of 79 years in 2024, marking a recovery from the sharp declines caused by the COVID-19 pandemic. Standard government projections suggest a modest climb to roughly 82 to 85 years by 2060.
However, emerging medical technologies and AI-driven breakthroughs are leading some experts to forecast more dramatic shifts, with some projections climbing into the high 80s over time, and potentially higher as medical innovation accelerates.
That's more time for inflation to work against you, and more time for a portfolio to either keep pace or fall behind. This is where the real risk lives — not in a bad quarter or a volatile market, but in the slow, almost invisible erosion of purchasing power, especially for portfolios built too heavily on fixed income or fixed-rate sources.
Those dollars don't adjust. They don't grow with inflation. They just sit there, losing ground one year at a time.
When I started my career in 1987 — when high inflation was still fresh in people's minds — we had a term for this. We called it going broke safely.
You weren't experiencing volatility risk in the stock market, yet your financial dollars were slowly eroding, and you were buying fewer eggs, milk and gasoline each passing year because of the insidious creep of inflation.
It's the financial equivalent of watching the fuel gauge drop, telling yourself you'll fill up at the next exit, then the next one, then the next one after that. The road feels smooth. The engine is still running. Nothing feels urgent … until it is. By then, your options are limited.
The problem with running on empty isn't the moment you notice it; it's how long you've been ignoring it.
The goal of planning isn't to predict inflation with precision. We won't. It will be higher than average at times, lower at others. The goal is to use assumptions grounded in history — and build a plan that can absorb variability.
The real danger isn't being off by a percentage point; the real danger is building a plan that works only if conditions stay perfect, because they won't.
"Running on Empty" wasn't really about a gas tank; it was about time, energy and what it costs to keep going without refueling. That's the part that sticks. Retirement planning isn't just a destination — it's a journey that lasts the rest of your life with changing conditions, unpredictable detours and a fuel gauge that doesn't care what you thought would happen.
It only reflects what's happening.
Here's the directive, and it's a simple one. Don't build a plan based on what inflation feels like today. Don't anchor to the last cycle, the last headline or the last few years of data.
As a CFP, I help my clients build a plan that assumes the road will change, because it will. We stress test those plans. We revisit them. We make sure the income and assets meant to support your future can keep up with it.
The most important question isn't whether inflation will matter: It's whether your plan is prepared for it. Because running out of fuel doesn't happen all at once, it happens slowly, quietly over time.
By the time you feel it, you're already miles past the last exit.
Other Lessons From the School of Rock
- A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and Around
- Does the Market Feel Like We Do? It Does Not, and This Is Why That Matters
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