Not Planning for a Long Retirement
You may end up spending more years in retirement than the years you spent working. Your spending habits and investment strategy need to take this into consideration.

Market Risk
Standard practice for retirees has been a conservative approach, investing primarily in bonds and CDs to avoid the volatility of the stock market. However, these conservative strategies can significantly reduce the opportunity for growth of your assets during your retirement years, and can eliminate the hedge against inflation that diversified stock portfolios offer.

Inflation
Even a 3% inflation rate can have a large impact on purchasing power. For example, a retiree with roughly $72,000 of living expenses in 2005 would need nearly twice as much ($150,000) to meet expenses 25 years later. Furthermore some costs, like health care, may rise even faster than the general inflation rate.

Health Care Expenses
A 2002 study estimates that a couple retiring today at age 65 without an employer-funded retirement health plan will need current savings of $160,000 to cover their expected health care. Moreover, roughly 50% of Americans will be admitted to a nursing home at some point in their lives, with half staying up to 2.4 years.