There are a lot of things to worry about when it comes to your retirement savings. Are you saving enough? Will you outlive your nest egg? Can you maintain a comfortable lifestyle? 
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​If you’ve had these concerns, you’re not alone. Most people have the same fears. Taking the time to understand why some retirees run out of money now can help you avoid the same mistakes in the future.
 
Here are the top ten most common reasons people wind up broke in retirement.

1. They’re afraid of stocks.
Anyone who lived through the Great Recession has probably watched their retirement savings shrink significantly and there’s a big temptation to pull all of your money out of the stock market. The truth is it’s usually smart to leave some of your money in stocks even throughout your retirement to give your nest egg a chance to grow.

2. They’re way too invested in stocks.
While the stock market provides the potential for growth, it’s not a good idea to keep all of your money in stocks because the market can be so volatile. A good strategy for some retirees, is to have 60% of your savings in stocks as you near retirement age. When you do retire, cut back to about 40% initially and then 20% as time goes on.

3. They live longer than expected.
Objectively, living a long time is a good thing but if you haven’t planned for it, you’re probably not financially prepared. A safe approach is to plan for a 30-year retirement. Trimming down expenses can help, too. Having your mortgage paid off before you retire helps as does downsizing into a smaller property that requires less upkeep. Or, consider moving to a state with a lower cost of living.

4. They don’t spend wisely.
It’s easy to spend too much when you first retire. After all, you’ve just started the next phase of your life, you don’t have to go to work anymore, and you can finally spend your time doing nothing but enjoying yourself. Without careful planning, though, this can really put a dent in your long-term savings.

5. They only have one source of income.
Relying on Social Security alone typically is not a good strategy. Aim for a mix of income from a 401(k), IRAs, or a pension if you’re eligible.

6. They’re unable to work beyond retirement age.
Currently, you can begin collecting Social Security at age 62 but a lot of people continue working until they have to collect it at age 70. That eight years can make quite a difference. People who are unable to work are at a big disadvantage because they lose this time.

7. They face an unexpected illness.
Healthcare costs can be financially debilitating and they only increase as we age. If you end up needing long-term care, the costs grow even higher. One way to prepare for this is to look into long-term care insurance in order to cut costs. Also, make sure that your health insurance is adequate leading up to and throughout your retirement.

8. They don’t think about taxes when making withdrawals.
The order that you withdraw from matters. Taxable accounts should be drawn from first while untaxed money like an IRA should be allowed to grow for as long as possible. And don’t forget about state and local tax implications!

9. They get scammed.
Retirees are prime targets for criminals, especially with how quickly modern technology has developed. Criminals are adept at phone and phishing scams while retirees aren’t quite as tech-savvy.

10. They have no emergency savings.
It’s one thing to plan a monthly budget to cover your mortgage, food costs, and utilities but large, unplanned costs aren’t quite as easy to weather. When you’re living off your retirement savings, an expensive car repair or replacing the roof of your home can be devastating.

Plan for Everything
Now that you know some of the reasons why people go broke in retirement, you can take the necessary steps to make sure you’re prepared to avoid these pitfalls. Retirement is what you’ve been working for your whole life. Do everything possible to make sure you enjoy it.
 
Opinions expressed are those of Thomas Fleishel and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.