After decades of working hard and saving for retirement, it’s not unusual to have a fear of spending your savings and switching to the “decumulation” phase when you retire. 

And if you have this fear, you’re not alone. Nearly 64% of Americans are more worried about running out of money than they are of death, according to a retirement study from the Allianz Center for the Future of Retirement.¹ People cited high inflation (54%), Social Security not providing as much support as needed (43%) and high taxes (43%) as their main reasons of concern.¹

While concerns are valid, retirement is a time to enjoy the money you’ve worked so hard for over the years. Careful planning and wise spending can help ease those fears.

Retirees are living longer and that matters

People are living longer than ever, and many retirees may spend decades in retirement,  which changes how you might plan for spending and savings. According to recent U.S. data, a 65-year-old man can expect to live, on average, another 18 years, and a 65-year-old woman about 21 more years.² If you’re planning to retire at 65, that means planning well into your mid-80s or beyond.

With that time horizon, you may naturally wonder: Will my savings be enough? How will health care needs evolve over time? Should I leave money for loved ones or spend more while I’m enjoying life?

Health care costs are high and rising

Health care remains a significant expense in retirement, and costs continue to rise. According to a 2025 report by Fidelity Investments, a healthy 65-year-old couple retiring this year could expect to spend roughly $345,000 on health care and medical expenses over the course of retirement.³

That estimate accounts for routine and expected medical costs — but not more intensive expenses like long-term care (LTC) or specialized treatment. Given rising medical costs, along with the potential for unexpected health events, it’s wise to build a buffer into your retirement spending projections.

To help prepare:

If eligible, consider contributing to a Health Savings Account (HSA), which grows tax-free and can be used for qualified medical expenses.

Try to stay healthy and active — prevention and healthy habits can help reduce long-term medical expenses.

Build a conservative health/medical expense component into your retirement budget to account for inflation, unforeseen health events and long-term care.

Long-term care: A real and growing expense

One of the most significant risks retirees face is the potential need for long-term care (LTC) and its significant costs. For a private room in a nursing home, the national median cost is $10,645 a month.⁴

Assisted-living communities cost less than full nursing homes, but even those can be substantial with costs varying significantly by region, facility type and level of care required.

Experts estimate that roughly 70% of seniors will need some type of long-term care during their lifetime, with many requiring care for several years.⁴  In addition long-term care costs have historically increased faster than general inflation.

Given these trends you know that the longer you live, the more likely you’ll need some level of care — so even if you’re healthy now, it’s prudent to build long-term care planning into your retirement plan.

To help prepare:

Explore long-term care insurance, hybrid life/LTC policies, or other financial tools particularly if you expect to fund care later in life.

If paying out-of-pocket or “self-insuring,” consider setting aside a dedicated portion of retirement savings to cover potential LTC needs.

Revisit housing and living-situation plans. For example, whether staying in your home, moving to a lower-cost area, or choosing assisted-living/nursing-home care might make sense depending on health and financial status.

Strategies to stretch your nest egg

Here are some financial planning ideas given current cost realities:

Diversify investments. Don’t rely exclusively on one type of investment (e.g., stocks). A diversified portfolio helps reduce risk from market volatility.

Build in a buffer for inflation and rising care costs. Plan not only for current costs, but for what health care, housing, and long-term care might cost 10 to 20 years from now.

Consider guaranteed-income options but weigh trade-offs. Instruments like annuities or income-generating investments can offer security, but come with tradeoffs (fees, taxes, reduced liquidity). Consulting a financial professional helps clarify if they fit your goals.

Include long-term care insurance in your retirement scenario. Given rising LTC costs and high odds of needing care, treat long-term care as a likely — not just possible — expense.

Maintain flexibility. Health, personal circumstances, and the broader economy can all change. Having a flexible plan (part savings, part investments, part income) helps you adapt.

The role of Social Security and retirement income

For many retirees, Social Security remains a critical source of baseline income. This lifetime income — especially including inflation-linked adjustments — helps provide a financial floor when pensions are rare and costs are rising.

However, Social Security alone rarely covers all retirement expenses — especially when factoring in health care and possible long-term care costs. That’s why Social Security should be viewed as one part of a broader retirement income strategy, along with your savings, investments, possible pensions/annuities, and planned spending.

Spending in retirement: Balancing enjoyment and caution

Retirement isn’t just about covering costs — it’s also about living. With decades potentially ahead of you, you don’t want to miss out on experiences, hobbies, travel, time with loved ones, or other things that bring you joy.

At the same time, spending down savings doesn’t have to feel reckless or risky — especially when you combine thoughtful planning with realistic assumptions.

Here are a few ideas:

• Build a “core and flexibility” spending plan: have a core budget that covers essentials (housing, food, healthcare, basic discretionary) — and a flexible bucket for enjoyment (travel, hobbies, legacy gifts, etc.).
• Revisit and adjust the plan every few years — especially as health needs change or cost-of-living and care costs evolve.
• Prioritize experiences and values that matter to you — whether that’s travel, family, community, or giving back — but pair that with a realistic view of long-term security.

With realistic assumptions and careful planning, the fear of spending down doesn’t have to dominate retirement. Instead, retirement can be a time of security, comfort, and fulfillment.