6 Key Signs You Can't Afford To Retire

The path to retirement security is littered with pitfalls, and recent data reveals critical red flags that could derail even the best-laid plans. From unchecked portfolios to inadequate healthcare coverage, these six signs are warning signals that demand immediate attention. Let's dissect each risk and explore strategies to reallocate assets, secure income streams, and safeguard against rising healthcare costs.

Sign 1: High Debt Entering Retirement

The Risk: Carrying credit card debt or loans into retirement is financially lethal. A 2024 EBRI study found 68% of retirees with debt held credit card balances, often due to medical expenses or emergencies. Compounding interest can erode savings quickly, leaving little to sustain a comfortable lifestyle.
The Fix: Prioritize debt repayment before retirement. Use emergency funds (if available) to eliminate high-interest debt, but avoid liquidating retirement accounts prematurely. For example, reallocating 5-10% of pre-retirement income to debt reduction can significantly reduce post-retirement stress.

Sign 2: Inadequate Emergency Savings

The Risk: Only 59% of retirees have three months of emergency savings—a sharp decline from 69% in 2022. Without this buffer, unexpected costs (e.g., home repairs, healthcare emergencies) force retirees to tap retirement accounts during market downturns or sell assets at inopportune times.
The Fix: Build a 6–12 month emergency fund in liquid, high-yield accounts. Consider tools like to maximize returns while maintaining accessibility. For retirees, this fund should be separate from long-term investments.

Sign 3: Unchecked Portfolio Diversification

The Risk: Over 40% of retirement plans lack compliant investment options (like QDIAs), leading to poor diversification. Underperforming portfolios, high fees, or inflation-sensitive assets (e.g., bonds) can deplete savings over time.
The Fix: Rebalance your portfolio to include inflation-resistant assets. Diversify into:
- TIPS (Treasury Inflation-Protected Securities):
- Real Estate (REITs): Exposure to rental income and property appreciation.
- Commodities (e.g., gold or energy ETFs): To hedge against market volatility.
Avoid high-fee actively managed funds; instead, opt for low-cost index ETFs like VTI or SPY.

Sign 4: Insufficient Healthcare Coverage

The Risk: Medicare covers only about 60% of healthcare costs, leaving retirees exposed to deductibles, copays, and long-term care expenses. The average retiree spends $5,000 annually on healthcare beyond Medicare, per Fidelity.
The Fix: Layer coverage strategically:
- Medicare Advantage (Part C): Adds vision, dental, and prescription drug coverage.
- Medigap (Part F/G): Fills Medicare gaps but lacks long-term care benefits.
- Annuities with Riders: Products like the Protective Life's “HealthLink” annuity provide supplemental healthcare payments.
- Long-Term Care Insurance: Essential for those with chronic conditions or family history.

Sign 5: Over-Reliance on Social Security

The Risk: 50% of retirees rely on Social Security for half their income, yet the program faces a 23% benefit cut by 2034 if Congress takes no action.
The Fix: Diversify income streams:
- Annuities: Convert savings into guaranteed income via .
- Rental Income: Use a portion of savings to purchase income-generating real estate.
- Part-Time Work: Leverage skills in a “bridge job” to delay claiming Social Security.

Sign 6: No Plan for Longevity Risk

The Risk: Women live 5–7 years longer than men on average, yet 40% of retirees underestimate their lifespan. Outliving savings is a real threat, especially with rising healthcare costs.
The Fix:
- Variable Annuities: Offer growth potential while guaranteeing minimum income.
- Reverse Mortgages: Access home equity without selling the property.
- Healthcare-Linked Annuities: Products like New York Life's “Health Rider” provide extra payments for chronic illness.

Conclusion: Act Now to Secure Your Future

Retirement readiness isn't a one-time checklist—it requires continuous rebalancing and adaptability. Address these six signs by:
1. Paying off debt before retiring.
2. Building a robust emergency fund.
3. Reallocating to inflation-resistant assets.
4. Securing comprehensive healthcare coverage.
5. Diversifying income beyond Social Security.
6. Planning for longevity with annuities or reverse mortgages.

The market won't wait for you to get ready. Start today by auditing your portfolio, reviewing healthcare options, and stress-testing your finances against worst-case scenarios. Your retirement depends on it.