Longer Lifespans and Rising Inflation Could Drain Your Retirement Savings Sooner Than Expected. This Strategy Could Help

Americans are facing longer retirement as well as higher prices and their savings may not stretch as far as they’d like.

Not only are people living longer, but sometimes they are forced to retire sooner than they expect to. Stubborn inflation could further eat into retirement income, leaving retirees with less money than anticipated.

A 2025 study by investment firm Dunham & Associates suggests that if retirement stretches to 50 years, a retired couple would spend $2.7 million on food alone. The average retirement account balance for Americans aged 55 to 64 was $537,560 in 2022.

The current life expectancy in the U.S. is 77.5 and the average retirement age is 62.

“Medical advances are promising unprecedented, unimagined longevity—but at the same time, persistent inflation will threaten purchasing power during the longer retirements that Americans may be able to enjoy,” said Salvatore Capizzi, executive vice president of Dunham.

Why Your Retirement Savings May Not Be Enough

As you approach retirement, conventional wisdom dictates that you skew your portfolio to more conservative fixed-income assets compared to stocks to lower risks and earn guaranteed income. However, according to Capizzi, that advice could be “systematically undermining the financial security of retirees” as inflation erodes their purchasing power.

“At just 2% inflation, a traditionally ‘conservative’ portfolio generating 4%-5% net returns could deplete 10 to 20 years before the end of a 50-year retirement—potentially leaving your clients without resources for their final decades,” the Dunham research found.

It doesn’t help that many retirees hope to rely on Social Security benefits, which may also be cut by 24% by 2034 if Congress doesn’t intervene to shore up the funds.

Increasing longevity is also causing retirees or those on the cusp of retirement to support older family members, according to Dunham. Many GenXers, or those born between 1965 and 1980, also financially support family members, making saving for retirement even more challenging.

Can You Fix Your Portfolio?

To keep up with inflation and lifespan expectancies, workers can create a portfolio that earns more than 4% to 5% above inflation.

Instead of utilizing the traditional bucket approach, which separates assets into when they will be used, adopting a “purpose-oriented portfolio strategy ” could create a more sustainable portfolio, the Dunham research suggested. This strategy separates assets into categories: distribution, flex, health care, and legacy.

“Retirement shortfalls should be fixed at the planning level,” said Kassi Fetters, a certified financial planner.