8 Tips to Stop Worrying About Running Out of Money in Retirement

The greatest financial danger in retirement isn't always the stock market. It's the constant, nagging fear of running out of money. This anxiety causes many people to underspend and worry, even when their finances are sound.

Here are eight ways to replace that worry with lasting security.

1. Determine your spending baseline

Worry often starts with the vague question, ''Am I spending too much?''

Instead of operating on gut feeling, work with an advisor to determine your personal sustainable withdrawal rate (often between 3% and 5%). Once you know your lifestyle is covered by a responsible withdrawal rate, you can stop guessing and start living confidently.

2. Make adjustments when needed

Many retirees treat their spending plan like an all-or-nothing system. This rigidity creates panic during market downturns.

3. Realize your spending will naturally decline

The high level of discretionary spending you need at age 65 will likely not be the same at age 85, especially once you have long-term care coverage (see No. 7).

Expenses for travel, hobbies, dining out, and maintaining multiple homes typically decrease as you age. Knowing that your major risk (long-term care) is insured, you can trust that your remaining costs will naturally ease over the next two decades. Your money is working harder when you're younger and enjoying it most, and your needs will taper off as your capital naturally draws down.

4. Create a recession buffer (the 'anti-panic' fund)

The greatest tactical threat to longevity is experiencing a large market crash early in retirement and having to sell depressed assets to pay for basics such as groceries. To protect yourself,

This ''recession buffer'' allows your growth assets (equities) to sit untouched and recover during a market downturn, preventing you from locking in losses. This separation between your living money and your long-term growth money is the most direct way to eliminate panic during volatility.

5. Buy out the risk of surprise taxes

Future, unknown tax rates and large required minimum distributions from traditional retirement accounts are a major source of financial uncertainty.

What can you do? Eliminate the tax uncertainty by creating a tax-free bucket.

By using targeted Roth conversions—using up lower tax brackets to recharacterize traditional IRAs—you ensure a significant portion of your savings is shielded from all future tax increases. Having a large tax-free account gives you maximum flexibility to control your taxable income every year, protecting you from future legislation and eliminating the anxiety of surprise tax bills.

Retirement is worry-free when your core, non-negotiable needs (housing, food, utilities) are covered by income sources shielded from market volatility.

Social Security is your primary source of inflation-adjusted, government-backed income. While claiming at full retirement age is a safe minimum, aiming to delay Social Security until age 70 maximizes your lifetime benefit.

If a gap exists between your guaranteed income and your essential expenses, you can buy a single premium immediate annuity. This annuity converts a lump sum of savings into an unbreakable income stream throughout your lifetime, closing the gap and securing your basic lifestyle.

7. Buy protection against catastrophic care costs

Long-term care is the single largest threat to a lifetime of savings. Getting a quality long-term care insurance policy protects your nest egg from being wiped out by nursing home or in-home care costs. Once that risk is contained, you no longer need to worry about a seven-figure expense appearing unexpectedly.

Home equity is your parachute, a huge, flexible reserve.

In an extreme situation—such as severe market crashes or unforeseen emergencies—accessing this capital through a reverse mortgage, a line of credit, or eventually downsizing and selling provides an unparalleled safety net, allowing you to invest your remaining liquid portfolio with more confidence.

You are now equipped with multiple strategies to build financial security. Feel better?

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This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/retirement.

Related Links

1. 3 Big Changes for Retirement Planning in 2026

https://www.morningstar.com/retirement/3-big-changes-retirement-planning-2026

2. The State of Retirement Income for 2026

https://www.morningstar.com/business/insights/research/the-state-of-retirement-income