# The Hidden Reason So Many Retirees Run Out of Money
Retirees deplete their savings far faster than spending habits alone would suggest. The culprit often sits in plain sight: longevity risk combined with poor sequence-of-returns planning.
Many retirees face a double squeeze. First, they underestimate how long they will live. Life expectancy tables show averages, but a healthy 65-year-old couple has a reasonable chance one spouse lives into their mid-90s. That extends retirement from 20 years to 30 or more. Second, the order in which investment returns arrive matters enormously. A retiree who withdraws money during a market downturn locks in losses and reduces the portfolio's recovery potential. This sequence-of-returns risk can devastate a retirement plan even if average annual returns look solid on paper.
Healthcare expenses compound the problem. Medicare covers much, but gaps remain wide. Long-term care costs can exceed $100,000 annually depending on the facility and region. Many retirees simply do not budget for these expenses until they arrive.
Planning ahead prevents this trap. Start by calculating your true life expectancy using actuarial tools, not guesswork. Plan for at least one spouse reaching age 95. Next, stress-test your withdrawal strategy against historical market downturns. A common rule targets 4 percent annual withdrawals, but that assumes balanced stock-bond portfolios. A portfolio heavy in bonds or cash may require smaller withdrawals.
Build a healthcare reserve separate from general retirement savings. Fidelity estimates a 65-year-old couple retiring in 2024 needs $315,000 to cover healthcare costs through life expectancy. That number shocks most people who have not saved for it.
Finally, consider delaying Social Security. Each year you wait from 62