How to Protect Your Retirement Savings

Paying for retirement has become a concern for millions of Americans.  This is not to say that having enough money for retirement hasn’t always been a concern.  But years of economy volatility and longer life expectancies have come together to form a perfect storm for today’s seniors.

However, one way to defeat the uncertainty is to plan.  While many people may get a feeling of anxiousness when try to plan for their needs some 20 to 30 years out.  As such, this article will share with you five tips on how to protect your retirement savings.


Two things are certain in life – death, and taxes.  Increasingly death means long, drawn out stays in hospitals or nursing homes and one thing to know about both places is that the meter is always running.

According to a recent 60 Minutes report, it can cost upwards of $10,000 per day to be hospitalized in the U.S.  This doesn’t include the cost of surgery or other expenses.  As such, one month in a hospital could end up costing $300,000 or more.

This highlights the reason why today’s seniors should invest in a long-term care policy.  Similar to life insurance policies, the cost of a long-term care policy will be based on your age, so the best bet is set up this option as soon as possible.

Another healthcare planning trick which will help you protect your retirement savings is to set up a Health Savings Account (HSA).  These accounts offer a ‘triple tax advantage’ as you deposit pretax earnings in the account and unlike 401(k) accounts, withdrawals are also tax-free.

Longer Lives

While it might not seem like it, the truth is that we are living longer, more active lives and you need to take this into account when setting up your retirement plan.    In fact, a relatively healthy 60-year-old is expected to live well into the 80’s and maybe into their early-90’s.  This means that you will need to set aside enough savings to live for 25 or 30 years after you finish working.

Think about it, a working couple bringing home $75,000 per year would need access to roughly $2 million over the course of a 30-year retirement.  While this does mean they will need to have all that money in the bank from day one, it does mean that the combination of Social Security, pension, and savings will need to set up a large enough nest egg to accrue the assets needed to pay for retirement.

Another option to supplement building up your nest egg could be a reverse mortgage.  Granted, this might not be for everyone but you can learn about your options here.

The ‘I’ Word

 With retirements extending 20 to 30 years, the dreaded ‘I’ world – INFLATION – could be the silent killer for most Americans.  While inflation could increase the value of the assets in your retirement portfolio it also makes everything else more expensive.

Ultimately, this means that you will get less bang for your buck – even if inflation remains relatively low over time.  While some retirement assets might automatically adjust for inflation, you will want to inflation adjust your entire retirement savings plan, or you will find yourself coming up short.


Sure, you don’t want to be too aggressive with your retirement plan but at the same time, you want to make sure that your portfolio can grow over time.   The reason is simple, you want to balance safety with the growth opportunities which will outpace the erosive effects of inflation.

As such, you will want to mix bonds, short-term investment, and stocks to maximize your growth potential without betting the house.  Just remember that even with diversification, you are not guaranteed against loss, but a comprehensive investment strategy will limit the amount that you have at risk at any one time.

Manage Your Withdrawals

It used to be that the 4% rule was the gold standard for managing withdrawals from retirement accounts.  However, the longer durations of retirement mean that this rule might not apply anymore.

Instead, the goal should be the balance withdrawals while making sure enough principal remains in the account so that it will continue to grow over time.  As such, the decision to make a withdraw from an account should not be tied to a rule of thumb but rather by looking at the near-term needs and then matching them with your longer-term goals.