5 Biggest Financial Concerns for Retirees and How to Fix Them

Why Retirees Are More Worried Than Ever About Money

New research confirms what I hear in my office every single week: retirees are anxious about their finances, and the anxiety is growing. A 2025 survey from the Employee Benefit Research Institute found that only 43% of retirees feel “very confident” they’ll have enough money to live comfortably throughout retirement—down from 52% just three years ago.

In my 20 years as a CPA and Enrolled Agent working primarily with clients over 50, I’ve watched these worries evolve from abstract fears into concrete, urgent problems. The 2025 Social Security COLA of 2.5% may add only about $77 per month for the average retiree, while grocery prices are up over 25% since 2020. The math simply isn’t mathing for a lot of people.

But here’s what I tell every worried client who walks through my door: worry without a plan is just stress. Worry with a plan is strategy. Let’s turn the five biggest financial concerns for retirees into actionable strategies you can start using today.

1. Inflation Is Quietly Eating Your Retirement Savings

This is the concern that tops every survey, and for good reason. Even “moderate” inflation of 3% per year cuts your purchasing power by nearly a third over a decade. For retirees on fixed incomes, that’s not an abstraction—it’s the difference between affording your medications and skipping doses.

According to The Senior Citizens League, Social Security benefits have lost approximately 13.7% of their purchasing power since 2010, despite annual cost-of-living adjustments. The COLA simply hasn’t kept pace with how retirees actually spend money.

The problem is structural. The Consumer Price Index used to calculate Social Security’s COLA (CPI-W) tracks spending patterns of urban wage earners, not retirees. Seniors spend proportionally more on healthcare and housing—two categories that consistently outpace general inflation. You can read more about this erosion in our deep dive on the stealth Social Security cut that cost seniors 13.7%.

How to Fight Back Against Inflation

1. Audit your spending quarterly. Most retirees haven’t updated their budget since they retired. Sit down every three months and compare actual spending against your plan. You’ll catch lifestyle creep and price increases before they become crises.
2. Hold 2-3 years of expenses in cash or short-term bonds. This “spending bucket” lets you ride out market downturns without selling investments at a loss, while keeping the rest of your portfolio invested for growth.
3. Consider Treasury Inflation-Protected Securities (TIPS). These bonds, available through Investopedia’s TIPS guide, adjust their principal with inflation. They won’t make you rich, but they’ll preserve purchasing power on a portion of your savings.
4. Delay Social Security if possible. Every year you delay past 62 (up to age 70) increases your benefit by 6-8%. That larger base means your future COLAs are calculated on a bigger number—a permanent inflation hedge.

2. Healthcare Costs Are the Retirement Budget Killer

Fidelity’s 2025 Retiree Health Care Cost Estimate projects that a 65-year-old couple retiring in 2026 may need approximately $185,500 to cover healthcare expenses in retirement. And that figure doesn’t include long-term care—the single expense category most likely to push costs dramatically higher.

What I see most often is clients who plan meticulously for their mortgage payoff and their travel budget, but treat healthcare costs as something they’ll “figure out later.” Later arrives fast when you’re facing a $3,500 monthly assisted-living bill or $500 in monthly prescriptions.

Medicare Alone Isn’t Enough

Medicare covers a lot, but it doesn’t cover everything. There are no caps on out-of-pocket spending in Original Medicare. Dental, vision, hearing aids, and most long-term care are excluded or severely limited. Even with a Medigap supplement, premiums themselves become a significant expense—especially if your income triggers IRMAA surcharges.

For 2026, the income-related monthly adjustment amount (IRMAA) thresholds mean that retirees with modified adjusted gross incomes above $106,000 (single) or $212,000 (married filing jointly) will pay higher Medicare Part B and Part D premiums. What catches people off guard is that IRMAA is based on your tax return from two years prior—so a Roth conversion or asset sale in 2024 could spike your 2026 premiums. We covered this exact trap in our article on how 5% CDs are quietly raising your 2026 Medicare premiums.

Strategies to Manage Healthcare Costs

Compare Medicare Advantage vs. Original Medicare + Medigap every year. Plans change annually. A plan that was perfect in 2024 may have dropped your preferred pharmacy or specialist from its network in 2025.

Use a Health Savings Account (HSA) before you retire. If you’re still working and have a high-deductible health plan, max out your HSA. After 65, you can withdraw HSA funds for any purpose without penalty (though you’ll pay income tax on non-medical withdrawals). For medical expenses, withdrawals are completely tax-free.

Plan for long-term care before you need it. Hybrid life insurance/long-term care policies have become more popular because they guarantee a benefit even if you never need care. Traditional long-term care insurance is still available but requires careful comparison shopping.

3. Running Out of Money Before Running Out of Life

Longevity risk—the possibility of outliving your savings—is the concern that keeps retirees up at night more than any market crash. And it should be taken seriously: a 65-year-old woman today has a 50% chance of living to age 87 and a 25% chance of reaching 93, according to the Society of Actuaries.

A survey released this spring found that older adults are depleting retirement savings earlier than expected, with inflation and unexpected expenses being the primary culprits. The median retirement savings for Americans aged 65-74 is approximately $200,000—which, at a 4% withdrawal rate, generates only $8,000 per year.

I often tell my clients: your retirement plan needs to work for 30 years, not 10. The strategies that protect you in your 60s are completely different from the ones that sustain you in your 90s. Planning for longevity isn’t pessimism—it’s math.

A Practical Framework to Avoid Running Out

1. Stress-test your withdrawal rate. The classic 4% rule was designed for a 30-year retirement. If you retired early or have a family history of longevity, consider starting at 3.5% and adjusting based on market performance.
2. Create a floor of guaranteed income. Between Social Security, any pension, and possibly a single-premium immediate annuity (SPIA), aim to cover your essential expenses—housing, food, utilities, insurance—with income that can never run out.
3. Keep a growth allocation. Even at 70, having 30-40% of your portfolio in diversified equities gives your money a chance to outpace inflation over the next two decades. The biggest risk for many retirees isn’t market volatility—it’s being too conservative.
4. Revisit your plan annually. I schedule annual reviews with every retired client. We look at spending, investment performance, tax projections, and health changes. A plan that isn’t updated is just a guess.

4. Taxes Are Taking a Bigger Bite Than You Expected

Here’s something that genuinely surprises many of my new clients: retirement isn’t the tax break they thought it would be. Between Social Security taxation, required minimum distributions (RMDs) from traditional IRAs and 401(k)s, and state income taxes, many retirees find themselves in the same—or even a higher—effective tax bracket than when they were working.

Up to 85% of your Social Security benefits can be taxed at the federal level if your combined income exceeds $34,000 (single) or $44,000 (married filing jointly). Those thresholds, set in 1993, have never been adjusted for inflation. The Social Security Administration provides a calculator to estimate your taxable benefits.

Tax-Smart Moves for Retirees

Roth conversions in your “gap years.” The period between retirement and age 73 (when RMDs begin) is often your lowest-income window. Converting traditional IRA funds to a Roth during these years means paying tax at a lower rate now to enjoy tax-free withdrawals later. But be careful—conversions count as income and can trigger IRMAA surcharges if you’re not strategic about the amounts.

Qualified Charitable Distributions (QCDs). If you’re 70½ or older, you can donate up to $105,000 per year directly from your IRA to a qualified charity. The distribution satisfies your RMD but doesn’t count as taxable income. For charitably inclined retirees, this is one of the most powerful tax strategies available.

Coordinate withdrawals across account types. Drawing from taxable, tax-deferred, and tax-free (Roth) accounts in the right proportions each year can keep you below key income thresholds—including the IRMAA brackets, the Social Security taxation thresholds, and the net investment income tax trigger at $200,000/$250,000.

For more on protecting your Social Security income from unnecessary taxation and other pitfalls, check out 4 ways retirees could lose Social Security benefits in 2026.

5. Fraud and Financial Exploitation Are Accelerating

The FBI’s Internet Crime Complaint Center reported that Americans over 60 lost more than $3.4 billion to fraud in 2023—a 11% increase from the prior year. And those are only the reported cases. The Consumer Financial Protection Bureau estimates that elder financial exploitation costs older Americans billions more annually when you include unreported cases and exploitation by family members or caregivers.

AI-powered scams have made the threat exponentially worse. Voice cloning technology can now replicate a grandchild’s voice from a few seconds of social media audio. Phishing emails impersonating the Social Security Administration or Medicare are increasingly sophisticated. I’ve had clients—smart, educated people—come within minutes of wiring money to scammers.

Protecting Yourself and Your Money

Freeze your credit with all three bureaus. It’s free, it takes 10 minutes, and it prevents anyone from opening new accounts in your name. You can temporarily lift the freeze when you legitimately need credit.

Set up account alerts. Every bank and brokerage offers real-time notifications for transactions above a certain dollar amount. Set the threshold low—$100 or even $50. Catching unauthorized activity early limits the damage.

Establish a trusted contact on your financial accounts. FINRA rules now allow (and encourage) broker-dealers to contact a trusted individual if they suspect financial exploitation or cognitive decline. This isn’t giving someone power of attorney—it’s adding a safety net.

Verify before you act. If you receive any communication claiming to be from the SSA, IRS, or Medicare, hang up and call the agency directly using the number on their official website. No government agency will threaten arrest, demand gift cards, or pressure you into immediate action. For a deeper look at emerging threats, read our guide on elder fraud and AI-powered scams.

Closing the Retirement Income Gap: Your Action Plan

The biggest financial concerns for retirees—inflation, healthcare costs, longevity risk, taxes, and fraud—are all interconnected. Inflation drives up healthcare costs. Higher healthcare spending forces larger withdrawals. Larger withdrawals increase your tax bill. And through it all, scammers are circling.

The good news? Every single one of these risks is manageable with the right strategy. Here’s your starting checklist:

1. Run a Social Security benefits estimate at ssa.gov and model the impact of delaying your claim.
2. Review your Medicare coverage during Open Enrollment (October 15 – December 7) every year without exception.
3. Schedule a tax projection session with a CPA or EA before December 31 to evaluate Roth conversions and charitable giving strategies.
4. Stress-test your withdrawal rate using a Monte Carlo simulation (most major brokerages offer free tools).
5. Freeze your credit and set up financial account alerts this week—not next month, this week.

I’ve spent two decades helping retirees navigate exactly these challenges. The clients who fare best aren’t the ones with the most money—they’re the ones with the most intentional plan. You don’t need to solve everything at once. Pick one concern from this list, take one action step today, and build from there. Your future self will thank you.