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Is your retirement savings safe?

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Refuge Financial Solutions

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Jul 22, 2025

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Colorado - Southern Colorado

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Financial retirement strategy can be difficult. Saving for retirement (accumulation) is only half the battle — the real challenge begins when it's time to turn that savings into income that lasts (distribution). I’ve found that many of those that do well during the accumulation phase have little idea what to do during the distribution phase. In Tom Hegna’s great book, Pay Checks and Play Checks, he addresses this by looking at risks that every senior must think about and mitigate during the distribution phase of their financial retirement strategy. Have you thought through these risks and planned accordingly?

Inflation risk

You may be in danger if this characterizes you: “I’m so scared of the stock market and losing money that I’d rather just keep all my money somewhere safe like a savings account.”

Inflation is a virtually guaranteed to eat away at the purchasing power of your retirement savings. That means that whatever money you currently have saved for retirement won’t be able to buy nearly as much in 10 or 20 years as it can now. Inflation has surged in recent years, with some years nearing 6–7%, reminding us how quickly prices can rise and purchasing power can shrink. Let’s look at some numbers and imagine you have $100,000 in a savings account that offers virtually no growth. If we estimate an annual inflation average of 3% for the next 20 years, your same $100,000 would have the equivalent purchasing power of $55,368 in today’s dollars. In other words, letting $100,000 sit without growing for 20 years is like giving up nearly half your purchasing power — thanks to inflation quietly eating away at it year after year.

Application: You should consider investing your retirement savings in something that will at least outpace inflation (something that will earn 3-4% or more).

Longevity risk

You may be in danger if this characterizes you: “I have some money in my retirement savings, but I haven’t really thought through a plan for withdrawing it. I figure I’ll just withdraw money as needed and I should be ok.”

As people live longer, our retirement savings must last longer as well. With average life expectancy in the U.S. near 80 and normal retirement at age 65, some plan for their savings to last 15 years. However, since 80 is the average life expectancy, many will live beyond that. Statistics also say that if you’re married, you have a better chance to live longer. If you have a husband and wife who are 65, there is a 50% chance that one of them will live to age 92. To be safe, it would be wise to at least plan for your retirement savings to last 25-30 years. To help accomplish that, many financial advisors suggest following the 4% rule. (Some adjust it to the 3% rule to be extra cautious). That is, that you should only withdraw 4% of your retirement savings in the first year of retirement and then adjust annually for inflation. That may seem extremely cautious, but the last thing you want to do is run out of your retirement savings at age 91. What options would you have then? Longevity is also a risk multiplier because the older you live, the greater the chances that you will face large health and financial risks that could devastate your retirement savings.

Application: It may be wise to consider utilizing a vehicle like an income-focused annuity that is designed to stretch your retirement savings and provide lifetime income that will last as long as you do.

Volatility risk

You may be in danger if this characterizes you: “I know that I must risk my retirement savings if I want to see it grow. Therefore, I keep all my retirement savings in market-based products like mutual funds, stock, bonds, etc.”

Relying completely on the long-term upward trend of the market makes sense for the 30-year-old still in the early years of the accumulation phase of financial retirement strategy. However, for the 65-year-old transitioning into the distribution phase of financial retirement strategy, more caution is advised. At that point, you have much less time to make up for large losses that come with market volatility. If you are wealthy, with hundreds of thousands of dollars in safe investments--by all means, risk larger portions of your retirement savings in market-based products with the hope of earning more. However, if you only have a few hundred thousand dollars (or less) in your retirement savings, you need to seriously consider volatility risk. And be careful when people speak of “diversification” being the magic bullet with your market-based retirement savings. Yes, diversification is good. But if all your “diversification” is in market-based vehicles and the entire market takes a dive, what happens then? Was that really true diversification? A simple rule of thumb you can use is the “rule of 100.” (Some call it an oversimplification, but it can be a good quick reference and starting point). Subtract your age from 100 to determine the percentage of your retirement savings allocated to volatile investments, with the remainder going into safe investment vehicles. For example, a 70-year-old would allocate 30% of her savings into risky, market-based investments while allocating the other 70% into safe retirement vehicles. What does your retirement savings allocation look like when using the rule of 100?

Application: It’s wise to consider protecting more of your retirement savings as you get older. The more money you have, the more money you can risk in volatile investments. However, if you only have a few hundred thousand dollars (or less) in your retirement savings, you may want to consider being more conservative when it comes to volatility risk.

Order of return risk

You may be in danger if this characterizes you: “I’m ok having a large amount of my retirement savings at risk to market fluctuations when I’m near retirement age. I can always reallocate to safer options later.”

During the accumulation phase of financial retirement strategy, the focus is on average return from your investment over a period of years. However, once you begin the distribution phase, the rules change. Studies show that experiencing a large loss from a market downturn in the years immediately before and after retirement have a much larger negative impact on how long your savings last than experiencing a similar loss at the end of your retirement years. To illustrate this, let’s look at an example. Imagine Person A and Person B both retire and begin taking distributions at age 65, live to age 90 and see their retirement savings grow at the exact same rate of return over those 25 years. However, Person A experiences a large loss from market downturns at the beginning of retirement while Person B experiences a large loss from market downturns at the end of retirement. The studies show that Person A is in much bigger trouble than his counterpart and will likely see his retirement savings depleted years earlier. When will the next market crash happen? No one knows but it’s a risk that should be seriously considered.

Application: What some refer to as the golden window or Retirement Red Zone is around 5 years before retirement and 5 years after retirement. Experiencing a large loss from a market downturn in those years could be devastating to your financial retirement strategy. Therefore, it’s wise to consider protecting a large portion of your retirement savings during those critical years.

Retirement should mean freedom to do the things you want to do. When it comes to financial retirement strategy, these are just a few of the main risks that everyone must navigate in order to most experience that freedom. You worked hard to save and accumulate your retirement savings. Once retired, you must work hard to educate yourself and make wise decisions so that your retirement years can be as relaxing and enjoyable as possible. Find someone you trust, that you can talk with about your specific situation and mitigating these risks. Make sure they’re looking out for your needs and not just their own. I wish you the best and here’s to a great retirement!

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Refuge Financial Solutions

Medicare Insurance 44 East Spaulding Avenue, Pueblo West, Colorado, 81007

Refuge Financial SolutionsGenuinely help people: That's not just a motto, it's our driving passion and the motivation behind all we do.In the midst of uncertain and unstable times, we offer a safe place - a refuge - for those looking for trustworthy financial information and solutions to the problems they face. As an independent broker, we are able to maintain our focus solely on what's best for our clients. We prioritize our clients' wants and needs above all else as we educate them and find the best solutions for their unique situations. Located in Pueblo West, we service clients throughout the Pueblo and Colorado Springs areas and beyond.Since we are laser-focused on our clients and not on pushing products, we are unique in that we offer a large variety of solutions for all types of life situations. Our solutions fall primarily into these four pillars:Strategic Retirement Planning (Protect your retirement)Do you feel confident about your retirement plan? Will you have enough saved? Is ALL of your retirement savings still exposed to market fluctuations?If you dont have a plan, then youre planning to fail. Its important that you think about your plan and mitigate your risks. We believe that true retirement diversification is making sure that at least some of your retirement savings is safe and securewhile also still growing! We offer creative solutions that allow you to do just that. You dont have to ride the heart-stopping rollercoaster called the Stock Market in order to see growth of your retirement savings. In fact, you can be guaranteed to never lose a penny of it! Seriously! There are better ways than putting 100% of your eggs in the 401k basket and hoping for the best. Our strategies include fixed index annuities, IULs and utilization of the Infinite Banking Concept.Medicare Solutions (Protect your health)Are you overwhelmed when it comes to Medicare? What if there were someone you could trust to help explain it all to you and help guide you to the best option for your situation?If youre eligible for Medicare, youve likely been bombarded with advertisements and information for Medicareyoure probably sick of it! Many are living on a fixed income and just want the best coverage at the most affordable rates. But theres so much to know and everyone says their option is the best. It can all be very overwhelming and its hard to know who to trust. Sadly, it can also be a playground for self-serving and deceptive agents looking to take advantage of people to make larger commissions. That reality and a desire to genuinely help seniors has driven Refuge into the Medicare arena where we seek to truly educate and equip seniors to get the coverage they need at prices that make sense for their situation. If you or someone you know is about to turn 65, wed love to help. Even if you already have Medicare, its important to review your coverage annually to make sure you still have the best coverage (since plans change each year).Life Insurance (Protect your family)What would your family do if something happened to you tomorrow? Would they be protected and provided for?No one likes to think about death but none of us are promised tomorrow. Ignoring that truth doesnt help and, in reality, leaves your family highly vulnerable. Making sure your family is taken care of when youre gone is one of the most loving things you can do. We offer a variety of life insurance options including: term, mortgage protection, final expense, guaranteed issue, participating whole life and indexed universal life. We dont work for an insurance company but instead go shopping for our clients among many of the best companies to find the best coverage for each situation. Whether your goal is just to protect your family or you also want to build wealth and leave a lasting legacy, we can find coverage that meets your budget, needs and goals.Legacy Planning (Protect what you've built)Do you know what would actually happen to your assets if you died today? Will you leave your loved ones a legacyor a mess to sort out?Legacy planning is about making sure what youve worked hard to build goes where you want it toand that the people you love arent left trying to figure everything out. We help make the process simple and approachable, guiding you through creating a comprehensive estate plan that can include a will, living trust, powers of attorney, healthcare directives, and more. With attorney-drafted documents and a secure online platform, you can put a plan in place that protects your wishes, simplifies things for your family, and helps you leave a legacy instead of a burden. We will also help you think through other legacy planning strategies like tax mitigation, retirement coordination and efficient transfer of wealth.Refuge Financial Solutions - contact us today so we can genuinely help YOU!