Watch these threats to lifetime income security

By Elliot Raphaelson
Posted on May 26, 2026

Bob Carlson is a recognized expert on retirement. I reviewed one of his books very favorably a few years ago. He also publishes “Retirement Watch,” an excellent monthly publication which covers the latest regulatory changes that impact retirement and estate planning.

In a recent publication Carlson sent to his subscribers, he discussed six threats to lifetime income security. Following are some of his observations and my own regarding these threats.

The foundations are crumbling

Congress is likely to continue to reduce benefits associated with both Social Security and Medicare. It’s no secret that Social Security is facing a large deficit. Congress has done nothing to solve the problem. Eventually, it will have to address the issue.

One option is simply to reduce your benefits. Another option is to increase the age when you can initiate benefits. A third option is to reduce the annual inflation adjustment.

Finally, Congress could alter the cap on FICA taxes. Regardless of which option Congress chooses, your benefits will be reduced.

Medicare is also facing financial problems. Congress has been reducing these benefits, and there is no doubt that benefits will be reduced in the future with possible increases in taxes.

You’re on your own for medical care

Every year the costs associated with medical care continue to increase more than the inflation rate. These increased costs affect both employers’ healthcare benefits and government healthcare offerings.

It is much more likely that benefits will be reduced. The latest regulations passed by Congress reduced benefits or increased premiums.

Many individuals don’t realize that Medicare does not cover long-term care. Even with insurance coverage, which is expensive, most individuals underestimate the costs associated with long-term care.

Most underestimate spending

Almost all of the major expenses I faced in retirement were much higher than they were previously. All of the following spending categories increased in retirement at a much higher rate than general inflation: new car, new home, vacations and especially healthcare.

Most advice is wrong or dangerous

Carlson points out that 90% of your returns in retirement are based on the expected returns from stock indexes. Accordingly, you should maintain a significant portion of your portfolio in equities. Federal Reserve policies generally minimize the returns you receive from the bond portion of your portfolio.

To minimize your taxes, maintain most of the equity portfolio in your retirement account rather than in accounts outside your retirement accounts.

Retirement lasts longer than most think

On average, expected life spans have increased, so many individuals retire early. Many corporations offer early retirement packages, minimizing employee expenses.

In fact, after working full-time for 34 years, I was offered an attractive early retirement package from a bank, and I retired at 58. I expect that I will have spent more years in retirement than I did as a full-time employee. Because I was offered a defined-benefit pension plan and a 401(k) plan with a 50% match, I was able to retire without a financial hardship.

Yet most corporations no longer offer defined-benefit plans, so most employees who are forced to retire with only a definedcontribution plan and Social Security are likely facing a 30 years retirement with limited income.

Your taxes won’t go down

Most individuals will face higher taxes in retirement. If you have a significant portion of your portfolio in traditional (non-Roth) investments, you will be facing required minimum distributions (RMDs), which increase as you age.

Up to 85% of your Social Security income is taxed at ordinary income tax rates. The income you receive from a defined-benefit pension will be taxed at ordinary income tax rates unless the account is a Roth account.

Bottom line: Because you will likely spend many years in retirement, you should take steps to ensure that you will have sufficient income.

In his monthly “Retirement Watch” newsletter, Carlson points out the latest tax regulations and changes in estate planning. In addition, he makes excellent prudent, conservative recommendations for your retirement portfolio. I subscribe, and I find the yearly subscription cost of $99 a bargain.