The Reality of Retirement Savings: Will You Use Up All Your Money?

Retirement sounds simple. Save money, quit working, and enjoy life. But in real life, retirement savings don’t always work out the way people expect. Some never touch their money. Others burn through it faster than planned. What is really going on?

Let’s unpack why many retirees end up with untouched savings, while others risk running out of money too soon. And more importantly, what you can do to avoid both.

The Retirement Spending Gap

People spend their lives focused on building retirement savings. But not enough attention goes into spending that money wisely once retirement begins. Most advice focuses on how much to save. But very few talk about how to use that money after work ends.

Mart / Pexels / Retirement is more about fear, habits, health, and surprises. You might end up with more money than you need, or not nearly enough. Either way, planning to spend is just as important as planning to save.

Many retirees don’t spend their money because they are afraid. They worry they will live longer than expected and run out of funds. So instead of enjoying retirement, they hold back.

A recent BlackRock survey showed that over 40% of retirees would rather keep working than risk spending down their savings. That kind of fear means a lot of people miss out on doing what they love, even when they have the money to do it.

Younger people don’t worry as much. They tend to be more optimistic about retirement, though even that confidence is slipping. Still, the fear of using up savings plays a big role in how people behave, regardless of age.

Saving to Leave a Legacy

Some people don’t spend because they want to leave money behind. They see retirement savings not just as income for themselves, but as something to pass down. For them, it is about family legacy, not just personal comfort.

Baby boomers, for example, have the highest retirement account balances. Many keep growing their savings during retirement because they are saving for their kids and grandkids, not just themselves. That is admirable, but it can mean missing out on enjoying retirement in the moment.

Sometimes, retirement plans don’t go as expected. Health problems or early death can leave large amounts of savings untouched. The Society of Actuaries found that many people die before using most of their money.

Matt / Pexels / Some pensions and retirement accounts don’t pass on easily to a spouse or family, especially if there is no survivor benefit.

That means money gets left on the table, never used for the purpose it was saved for.

Rising Costs That Drain Saings

Not everyone leaves savings untouched. Many retirees run into serious financial stress because of rising costs. Health care is the biggest threat. Medicare doesn’t cover long-term care, and nearly 70% of older adults will need some kind of help.

Fidelity says a retired couple might need over $300,000 just for medical expenses. That is a huge chunk of savings gone, and fast.

And that is not the only problem. Everyday expenses like food, housing, and utilities keep going up. Inflation eats away at fixed income. Many retirees say they now expect to work longer or work part-time just to stay afloat.

However, a growing number of parents are using their retirement savings to help adult children. Be it student loans or rent, the money meant for retirement gets used elsewhere.

Bankrate reports that half of parents with adult kids are dipping into their savings to support them. It is generous, but risky. If you don’t set clear financial boundaries, your retirement plans can get off track fast.