As a financial advisor, your role is to protect more than just portfolio performance: you’re safeguarding your clients’ peace of mind and long-term independence. But even the best-laid retirement plans can unravel without a proactive strategy to address today’s most overlooked threats to retirement security.

Here are the six biggest threats to retirement security that every advisor should have on their radar and how to help your clients stay one step ahead.

1. Sequence of Returns Risk: Timing Can Crush a Lifetime of Savings

Sequence of returns risk refers to the danger of experiencing poor investment returns early in retirement. Even if the average long-term return is solid, market losses in the first few years can permanently damage portfolio longevity.

Here’s why: When clients withdraw income from a declining portfolio, they’re locking in losses and reducing the capital available to recover when the market rebounds. This can cause even a well-funded retirement to run dry too soon. Threats to retirement security come at all stages of retirement.

Mitigation Tip: Introduce buffer assets like a reverse mortgage line of credit or cash reserves to avoid drawing down investments in down years. Timing withdrawals can be just as critical as asset allocation in mitigating risk brought on by threats to retirement security.

2. Longevity Concerns: Outliving Assets Is No Longer a Rare Scenario

With many retirees now living well into their 80s and 90s, longevity is no longer a fringe risk: it’s the norm and one of the biggest threats to retirement security.

According to the Social Security Administration, a 65-year-old today has nearly a 50% chance of living past age 85. This creates a fundamental planning challenge: How do you create sustainable income for an unknown duration?

Mitigation Tip: Consider products and strategies that generate lifetime income or create flexible, durable withdrawal systems. And don’t overlook home equity: it can serve as a powerful tool for long-term liquidity.

3. The 4% Rule Is Under Pressure

The “4% Rule,” once a gold standard for sustainable retirement withdrawals, is under scrutiny in today’s economic climate.

Low interest rates, increased market volatility, and longer lifespans all strain the assumptions behind this rule. For many clients, a 4% withdrawal rate may be too aggressive, or too conservative, depending on their unique circumstances. How is this one of the biggest threats to retirement security? Because many folks can’t sustain the lifestyle they require with a mere 4% withdrawal rate, they require more just to meet basic needs.

Mitigation Tip: Shift from static rules of thumb to dynamic withdrawal strategies. Tools like the Coordinated Withdrawal Strategy: which blends portfolio withdrawals with reverse mortgage access, can optimize income timing and reduce pressure on investment accounts. Want to learn more about the Coordinated Withdrawal Strategy? Read this blog on our website HERE.

4. Losses to Traditional Retirement Accounts from Economic Uncertainty

From market corrections to required minimum distributions (RMDs) and taxation, traditional retirement accounts are vulnerable to multiple threats.

Market downturns can significantly reduce the value of 401(k)s and IRAs, especially if withdrawals are timed poorly. Meanwhile, RMDs can trigger tax inefficiencies and disrupt carefully planned asset allocations.

Mitigation Tip: Diversify income sources. By incorporating tax-free or tax-deferred tools, like Roth conversions or strategic home equity usage through a reverse mortgage, clients can reduce their reliance on traditional accounts and preserve more wealth over time.

5. Inflation: The Silent Erosion of Buying Power

Over a 20- to 30-year retirement, inflation can quietly and relentlessly eat away at purchasing power. Even modest inflation can cause real damage when compounded over decades, and healthcare, housing, and long-term care costs often rise faster than the general inflation rate.

For example, a retiree living on $60,000 per year today will need nearly $81,000 to maintain the same lifestyle in 15 years at a modest 2% inflation rate, and much more if inflation surges.

This makes fixed-income strategies an increasing threat to retirement security. Clients relying solely on pensions, annuities, or low-yield bonds may find their budgets stretched thin just to meet basic needs.

Mitigation Tip: Help clients hedge inflation through a combination of growth-oriented investments and flexible income sources. Home equity, accessed through a reverse mortgage line of credit, can also act as a cost-of-living buffer, growing over time and providing tax-free liquidity when other income streams feel the pinch. Incorporate home equity withdrawals strategically to meet certain goals, like controlling AGI to avoid costly tax payments.

6. Divorce in Retirement: A Late-Life Disruption with Long-Term Consequences

Divorce isn’t just a younger person’s issue. In fact, the divorce rate among adults 50 and older has doubled since the 1990s, a trend known as “gray or silver divorce.”

For retirees, divorce can be financially devastating. It often requires splitting retirement accounts, selling or refinancing the primary residence, and renegotiating income needs at a time when earning potential is limited.

Suddenly, two households must be supported with the same pot of assets that was meant for one. This can drastically reduce financial security and increase the risk of running out of money, especially for women, who statistically face greater longevity and lower lifetime earnings.

Mitigation Tip: Encourage couples to maintain financial transparency and conduct regular retirement plan reviews together. For clients navigating a divorce, revisit the retirement income strategy immediately. Home equity, again, may be a critical tool in reestablishing financial footing, especially for a spouse who wants to remain in the home.

Final Thoughts: Incorporating A Buffer Asset As Holistic Defense Against Threats to Retirement Security

The greatest threats to retirement security are the intersection of several risks, many of which go unaddressed until it’s too late. As an advisor, the most valuable thing you can offer is proactive education and integrated strategies to avoid these threats to retirement security.

By blending traditional portfolio planning with innovative tools, like a reverse mortgage, coordinated withdrawal timing, and flexible income solutions, you can help your clients move from uncertainty to confidence without having to plan too far ahead. Many clients make it to retirement with the assets they have and no way to go back in time to gain more or avoid losses. Strategic access and deployment of their home equity is a way to solve today’s problem with the assets they already have.

Ready to explore how to integrate home equity into your clients’ retirement stability plan? Reach out to our team for a personalized strategy session.