The 5 Greatest Obstacles to Reaching Financial Security in Retirement

Retirement is a significant milestone in your life, representing a time to enjoy the fruits of your labor and pursue personal interests. However, achieving financial security in retirement has become increasingly challenging in recent years. As you plan for your golden years, you’ll need to navigate several obstacles that can impede your path to financial independence.

If you don’t feel financially prepared for retirement or are already retired but have concerns about your financial future, you’re not alone! According to a 2022 study by Northwestern Mutual, over 40% of Americans don’t expect to be financially ready for retirement when the time comes. At the same time, more than one in three report that they have not proactively taken any steps to address this concern.1

The good news is, it’s not too late to secure greater financial peace of mind! Let’s explore five of the greatest challenges you may face and the strategies you could use to overcome them. The illustrations below are general recommendations–consult a trusted financial advisor for guidance based on your specific goals and situation.

  1. Insufficient Retirement Savings: Lack of retirement savings is a prevalent obstacle that hinders financial security during retirement. Today, adults in the US anticipate they will need at least $1.27 million to retire comfortably. By contrast, the average American’s retirement savings is just $89,300.2 That’s a sizeable gap!

    Many individuals fail to save enough due to various reasons including limited income, poor financial planning, or unexpected expenses. Insufficient savings during retirement can lead to a reduced quality of life, an increased need for outside assistance, or the need to work longer than desired.

    Solution: If you’re already in retirement, there are different ways to access additional funds, like taking on a part-time job. Another option is to access cash by tapping into your home equity. A reverse mortgage is a home equity solution specially designed to help older homeowners find greater financial security in retirement and could offer you much needed cash-flow, among other benefits, if your savings have dwindled.  

    If you’re still in the planning stage and have not yet retired, it’s crucial to start saving now and to save consistently moving forward in order to address this challenge. Developing a realistic budget, cutting unnecessary expenses, and maximizing contributions to retirement accounts like 401(k)s or IRAs can significantly bolster savings. No matter your life stage, seeking professional advice from a trusted financial advisor can help you create a plan that’s right for your individual circumstances.
  2. Rising Healthcare Costs: In 2020, Americans spent $64 billion on out-of-pocket long–term services and supports.3 And, according to, a person turning 65 has almost a 70% of needing some type of long-term care during their lifetime.4 The escalating costs of healthcare combined with the likelihood that you will need long-term care at some point pose a significant obstacle to financial security in retirement. As we age, our healthcare needs typically increase, and medical expenses can quickly deplete savings. Costs related to long-term care, prescription medications, in-home care, and insurance premiums can be a burden and leave you vulnerable to financial instability. And, if you hope to stay in the home you love for as long as possible, you may need the ability to fund home modifications or renovations to better ensure a safe living environment.

    Solution: Planning ahead for healthcare and healthcare-related expenses is vital and it’s advisable to explore all your options, including Medicare, long-term care insurance, or other retirement solutions. Adopting a healthy lifestyle and focusing on preventive care can help minimize your medical expenses down the road. Additionally, regularly reviewing your finances and updating your healthcare coverage based on your individual needs is essential.
  3. Outliving Savings: Increased life expectancy is undoubtedly a positive outcome, but it also presents a challenge for retirees: the risk of outliving their savings. A third of Americans expect to live to be 100 and an equal third predict there is a 50% chance they will outlive their savings.1 However, more than one in three report having taken no proactive steps to address their concern.1 You must consider the possibility of funding several decades of retirement, which requires careful financial planning and asset management.

    Solution: Mitigating the risk of outliving savings involves a multifaceted approach. Diversifying investments, considering annuities, and exploring financial solutions provide a more secure financial foundation. It is crucial to create a plan that balances lifestyle needs with preserving the longevity of savings is crucial. It is also essential to stay informed and seek professional guidance to optimize your financial decisions.
  4. Economic Volatility and Market Fluctuations: With today’s high inflation rates5 and Americans’ retirement savings at the mercy of the unpredictable nature of financial markets, financial security can be harder than ever to achieve and maintain. Economic downturns, stock market volatility, and inflation can erode the value of your investments, affecting your retirement portfolio and income streams.

    Solution: To navigate economic uncertainties, you should work with a financial professional to maintain a well-diversified retirement portfolio. Regularly reviewing and rebalancing the portfolio based on risk tolerance and market conditions is important. Developing contingency plans, such as emergency funds, can also provide you with a buffer during market downturns.
  5. Inadequate Financial Literacy: Lack of financial literacy is a significant obstacle that prevents individuals of all ages from making informed decisions about retirement planning. Many of us struggle to understand complex financial concepts, investment strategies, and tax implications, leading to suboptimal choices and missed opportunities.

    Solution: Enhancing financial literacy is crucial for attaining retirement security. Engaging in educational resources, attending workshops, or seeking guidance from financial advisors can help you improve your understanding of personal finance. Taking the time to learn about investments, taxes, and estate planning can empower you to make sound financial decisions and better protect your assets.

Achieving financial security in retirement requires careful planning and overcoming various obstacles. Addressing the challenges outlined above can enhance your chances of attaining a comfortable retirement. By seeking professional guidance and staying informed, you can navigate these obstacles and pave the way for a financially secure and fulfilling retirement journey. If you’re interested in learning more about how you can use the Power of Home® to secure your financial future, contact our team today!


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