There’s a common belief that crossing the $1 million mark means you’re in the clear for retirement. Maybe. But probably not. A seven-figure portfolio helps, no question – but it doesn’t protect you from the risks that chip away at retirement security, sometimes fast and sometimes slowly. If you’re heading into retirement or asking the question: can I afford to retire? Maybe you are just starting to plan seriously…there are seven major risks you need to look at directly. These aren’t the fun parts of retirement planning but ignoring them can wreck even a well-built plan.
1. Healthcare Costs
Most people underestimate how much healthcare will cost in retirement. Medicare doesn’t cover everything. It doesn’t cover dental, vision, or long-term care. And even with a supplemental plan, there are still out-of-pocket costs. Fidelity estimates that a 65-year-old retiring today will need around $165,000 just for healthcare expenses during retirement.1 That number isn’t shrinking.
Unexpected illnesses, specialist visits, hospital stays – they add up. If you haven’t accounted for these costs in your budget, you’ll feel the squeeze. Especially if you’re pulling from investments during a down year. It’s one of the top reasons people run through their savings faster than expected.
2. Market Volatility
A million-dollar portfolio isn’t a fortress. If you’re pulling $60,000 to $80,000 a year from your accounts and the market drops 20%, that portfolio starts eroding quickly. Volatility matters most in the early years of retirement – called sequence of returns risk – when poor returns can cause long-term damage.
Too many people retire with a portfolio that’s still built for growth, not income. Or they ignore asset allocation entirely. They ride out the ups and downs, hoping the market bounces back before they need to withdraw more. That’s not a plan. That’s gambling.
3. Inflation
If you’re planning to live 20 or 30 years in retirement, inflation isn’t just an annoyance – it’s a threat. Your money loses value over time, and if you’re living off a fixed income or drawing from a portfolio that isn’t adjusted for inflation, your purchasing power shrinks.
This problem compounds if you retire early. A 62-year-old who lives into their 90s will feel the full impact. You might be spending $70,000 a year now. What happens when that same lifestyle costs $110,000 a year two decades from now? You need a financial plan with a complimentary investment plan to help mitigate these risks.
4. Longevity Risk
Outliving your money sounds like a worst-case scenario – and it is. The average 65-year-old has a pretty good shot at living well into their 80s or 90s. That’s two, maybe three decades of needing reliable income. And that’s assuming you’re in average health. If you take care of yourself and avoid major issues, you might live even longer.
A longer life is a good thing, but only if your financial plan matches it. Most retirement plans focus too heavily on the first ten years. If you’re not planning for the final fifteen, you’re exposed.
5. High-Interest Debt
There’s no place for credit card debt in retirement. Yet many retirees carry balances – often because they weren’t expecting certain expenses or because they overspent early in retirement.
If you’re paying 18% interest on a credit card while earning 5% in a balanced portfolio, the math is working against you. This debt eats into your monthly cash flow and can create anxiety around spending. Before you retire, high-interest debt needs to be cleared. If it’s not, you’re setting yourself up for stress and financial drag.
6. Overspending and Lifestyle Creep
It’s easy to spend more than you think. You start retirement with a couple of trips, maybe a remodel, some new hobbies. Before long, you’re blowing past your budget and assuming you can cut back later. But habits lock in fast.
The first five years of retirement often set the tone for the next 20. If you overspend early, it’s hard to recover. Once the money’s gone, it doesn’t regenerate – unless you’re working part-time or delaying Social Security. Even then, the damage can linger.
Retirement isn’t about what you can afford in the moment. It’s about what your money can support year after year, even with curveballs.
7. Unforeseen Expenses
Your roof leaks. Your adult child needs help. Your car dies. These aren’t imaginary scenarios – they happen all the time. And if you don’t have an emergency fund that’s separate from your investment accounts, every surprise becomes a withdrawal.
Pulling from a portfolio to cover one-off expenses isn’t ideal, especially in a bad market year. The more times you dip into your principal, the less buffer you have for longevity or inflation.
An emergency fund should be liquid, stable, and easy to access. Think of it as your short-term volatility shield – one of the few defenses you control completely.
So, What Now?
Knowing these risks is one thing. Understanding how they apply to your actual situation is another. That’s where tools like a retirement readiness quiz come in. These quizzes aren’t magic. They won’t spit out a perfect answer or tell you your retirement date. But they will surface blind spots.
Taking a quiz can help reveal whether your plan is stable – or if you’re just hoping things work out.
Why Fragasso Financial Advisors Is Talking About This
Fragasso Financial Advisors, a Pittsburgh-based wealth management firm, offers a retirement readiness quiz through their resource site CanYouAffordToRetire.com. It’s a tool designed to give individuals a clearer picture of their financial preparedness. They’re not just looking at your total savings – they’re asking whether your plan prepares you for the future.
If you’ve saved $1 million or more, you’ve done a lot right. But retirement isn’t just about hitting a number. It’s about having a plan that holds up when things don’t go as planned. These seven risks are real. And the sooner you see them; the sooner you can address them – before they start draining the retirement you’ve worked so hard to build.
1 https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
Investment advice offered by investment advisor representatives through Fragasso Financial Advisors, a registered investment advisor.
