When most people think about retirement planning, they focus on how much money to save, what to invest in, and when to claim Social Security. But in Episode 90 of Last Paycheck, Rob and Archie Hoxton remind us that what can go wrong is just as important as what can go right.
Even if you’ve saved diligently, retirement is full of risks that can derail your plan if left unchecked. In this episode, the Hoxtons break down five critical risks that retirees often underestimate—and offer practical steps to help you avoid common financial landmines.
1. Investment Risk: Playing It Too Safe Can Cost You
It’s tempting to go ultra-conservative with your investments once you stop working. After all, no one wants to see their nest egg drop 10% overnight. But as Archie and Rob explain, avoiding all market risk often means settling for returns that fail to keep up with inflation.
Over a 30-year retirement, that gap adds up. Staying in cash or low-yield CDs might feel safe now, but it can result in eroded purchasing power later. The key is to maintain a diversified portfolio that matches your time horizon and withdrawal needs, even in retirement.
“Very few people can afford the luxury of not taking investment risk,” says Rob. “Inflation wins in the long run if you’re not growing your money.”
2. Inflation: The Silent Wealth Killer
Even a modest 2–3% inflation rate can reduce your buying power by nearly half over a typical retirement span. And that’s before considering healthcare, which often rises at double the rate of general inflation.
Inflation isn’t just a number on a chart—it’s the real cost of your future lifestyle. The Hoxtons stress that your retirement plan needs to factor in rising prices for essentials like housing, food, and medical care.
3. Taxes and Medicare: The “Tax Torpedo” Surprise
If you think your tax burden will go down in retirement, think again. Depending on how your assets are structured, required minimum distributions (RMDs) from retirement accounts can suddenly push you into a higher tax bracket—triggering increased Medicare premiums and making Social Security benefits taxable.
Rob and Archie refer to this combination of unexpected costs as the “tax torpedo.” Without proper planning, your carefully saved money could disappear faster than you think. The good news? Thoughtful tax and withdrawal strategies can mitigate much of the damage.
“If you plan ahead, there’s a lot you can do to make that tax torpedo smaller,” Archie notes.
4. Longevity Risk: Will Your Money Last?
Planning to live until 85 might seem realistic, but what if you or your spouse lives into your 90s or even past 100? More people are reaching triple digits than ever before, and retirement could easily last 30 years or more.
“You don’t want to be the advisor calling someone on their 85th birthday to say, ‘This is the day you planned to run out of money,’” Rob jokes—but the risk is very real.
Rob and Archie recommend assuming a longer-than-expected life span in your financial projections. That means not just saving enough, but also managing your investments, spending, and tax exposure in a way that protects your long-term sustainability.
5. Lack of Planning: The Biggest Risk of All
Each of the previous four risks can be addressed with thoughtful planning—but too many retirees simply wing it. Whether it’s skipping a withdrawal strategy, failing to consolidate accounts, or never running the numbers with a professional, small mistakes can snowball into major problems.
A comprehensive financial plan doesn’t eliminate risk—but it gives you tools and strategies to stay one step ahead.
Final Takeaway
Retirement isn’t just about income—it’s about resilience. By recognizing these risks and proactively planning for them, you can make your money last and your retirement thrive.