Will My Money Last? Steps to Take if You're Worried About Outliving Your Assets

A practical framework for tackling the biggest fear in retirement planning

If there’s one question that keeps pre-retirees up at night, it’s this: will my money last? It’s not an irrational fear. People are living longer, healthcare costs are rising, and markets don’t move in a straight line. The good news is that outliving your assets isn’t an inevitability — it’s a risk that can be managed, measured, and in many cases, significantly reduced. The key is knowing which questions to ask before the pressure is on.

What follows is a practical framework — organized around four categories — that covers the most important issues to evaluate if longevity risk is on your radar.

Start With the Big Picture

Before diving into investment strategies or insurance products, step back and look at the fundamentals. How long might your retirement actually last? Your family’s history of longevity is a useful — if imperfect — data point. If your parents and grandparents routinely lived into their late 80s or 90s, planning for a 30-plus-year retirement isn’t pessimistic; it’s realistic.

Next, crunch the numbers to determine what your expenses will be in retirement and how those expenses will shift over time. Early retirement tends to be the high-spending phase — travel, dining, hobbies. But later retirement often brings a different kind of cost pressure: healthcare, prescriptions, and potentially long-term care. These essential expenses tend to rise faster than general inflation, and they’re not optional. A retirement budget that only models today’s spending patterns is likely to underestimate what you’ll need in your 80s and beyond.

▶ Key question: How much flexibility do you have to cut discretionary spending during a market downturn? Retirees who can temporarily reduce spending — delay a trip, eat out less, postpone a home project — have a powerful built-in shock absorber that extends portfolio longevity.

There’s also a scenario many couples don’t like to think about but absolutely should: the financial impact of losing a spouse. When one partner passes, Social Security benefits are reduced, pension payouts may change, and the surviving spouse often shifts to a higher tax bracket (single filer status) even though their income hasn’t changed much. Planning ahead with strategies like Roth conversions or joint-life payout elections can provide meaningful protection against this often-overlooked risk.

Build a Floor With Guaranteed Income

One of the most effective ways to reduce the fear of outliving your money is to build a reliable income floor — a base layer of guaranteed income that covers your essential expenses regardless of what the market does.

Social Security is the cornerstone of that floor for most retirees, and the claiming decision shouldn’t be taken lightly. Every year you delay benefits past your Full Retirement Age increases your monthly payment by 8%, up to age 70. Even delaying just a year or two between age 62 and your Full Retirement Age provides a significant boost to your baseline benefit. That’s a guaranteed, inflation-adjusted raise with no market risk. For someone worried about longevity, delaying Social Security is a high impact option.

If you have a pension, the decision between monthly payments and a lump sum deserves careful analysis. Monthly payments provide predictability, but you’ll want to assess the financial health of the pension plan and understand how much of your benefit is backed by the Pension Benefit Guaranty Corporation (PBGC), especially if your benefit exceeds standard coverage limits.

▶ Worth exploring: Deferred income annuities (DIAs) and qualified longevity annuity contracts (QLACs) are designed specifically for longevity protection. They begin paying out later in life — often at age 80 or 85 — precisely when the risk of running out of money is highest. They won’t solve every problem, but they can significantly reduce your tail risk.

A common concern with annuities and pensions is what happens if you die earlier than expected. It’s a valid question. Look for features like return of premium, cash refund options, or death benefits that protect against losing the investment entirely. Just know that adding these protections typically reduces the monthly payout — it’s a trade-off between income and insurance. Similarly, if you’re worried about inflation eroding your guaranteed income over time, cost-of-living adjustment (COLA) riders are available on some annuity products, though they come with lower starting payouts.

Manage Your Portfolio for the Long Haul

Your investment portfolio is likely your largest and most flexible retirement asset, but it also carries the most uncertainty. The goal isn’t to eliminate risk — it’s to manage it intelligently so your money lasts as long as you do.

Start with your withdrawal strategy. The traditional 4% rule is a useful benchmark, but dynamic spending plans that account for your specific situation are likely to be the better approach. A flexible withdrawal strategy — one that adjusts based on market performance — tends to produce better outcomes over long retirements. Spend a little less during down years, a little more during strong ones, and your portfolio gains significant staying power.

Diversification matters too, but not in the way most people think about it. Being too conservative can be just as dangerous as being too aggressive. An all-bond portfolio might feel safe, but it may not generate enough growth to keep pace with inflation over a 25–30 year drawdown. On the other hand, a portfolio that’s too heavily weighted in equities exposes you to sequence-of-returns risk — the danger that a major downturn in your early retirement years permanently impairs your portfolio’s ability to recover.

▶ Sequence-of-returns risk is a significant risk for new retirees. A significant market drop in year one of retirement has a far greater impact on portfolio longevity than the same drop in year fifteen. Mitigation strategies include maintaining a cash reserve, using guaranteed income to cover essentials, and having the flexibility to reduce withdrawals temporarily.

Don’t overlook the tax dimension of your withdrawal strategy, either. Coordinating distributions across taxable, tax-deferred, and tax-free (Roth) accounts can meaningfully reduce your lifetime tax burden and help your assets stretch further. And finally, consider the role your home plays in your financial plan. Whether it’s downsizing to free up equity, modifying to age in place, or exploring a reverse mortgage as a liquidity buffer, your home is an asset that shouldn’t be ignored in the longevity conversation.

Consider Insurance to Protect Against the Unknowns

A health crisis or an extended stay in a care facility can often overwhelm household finances. That’s where insurance comes in — not as a luxury, but as a risk management tool.

Long-term care is the biggest wildcard in most retirement plans. The costs are significant, the probability of needing care is higher than most people assume, and the financial damage of an unplanned multi-year care event can be catastrophic. Long-term care insurance, whether traditional or a hybrid policy that combines LTC coverage with life insurance, can help protect your savings from being depleted by a single health event. For those who prefer not to purchase a standalone policy, deferred income annuities and QLACs can serve as a partial backstop by providing guaranteed income during the later years when care needs are most likely to arise.

Life insurance also plays a strategic role that many retirees overlook. If you have a pension, life insurance can give you the confidence to elect a higher single-life payout — rather than a reduced joint-life payout — while still protecting your spouse’s income needs through the insurance death benefit. When the math works, this strategy may help reduce the risk of outliving your assets while still protecting your spouse. 

Putting It All Together

Outliving your assets isn’t a single problem — it’s a collection of interconnected risks: longevity, market volatility, inflation, healthcare costs, taxes, and the loss of a spouse. No single product or strategy addresses all of them. The most resilient retirement plans layer multiple approaches: a guaranteed income floor, a flexible and diversified portfolio, tax-efficient withdrawal sequencing, appropriate insurance coverage, and willingness to adapt as circumstances change.

Ultimately, having a solid financial plan in place is one of the most effective ways to protect yourself in retirement. Often, the retirees who face the greatest financial struggles aren't those who planned and fell short—they are usually the ones who never took the time to develop a strategy in the first place.

Tad Jakes, CFP®, EA, ECA

Disclaimer: The financial concepts, tax laws, market projections, and strategies referenced in this article reflect current regulations and publicly available data, all of which are subject to change. Financial planning and investment decisions are highly individual and depend on a wide range of personal, financial, and health-related factors. This content is intended for educational purposes only and does not constitute personalized financial, tax, or legal advice. Please consult a qualified financial advisor, tax professional, or legal counsel regarding your specific situation.