In my 20-year career as a financial adviser, I have witnessed clients run out of money three times before or prematurely during their retirement.

As an adviser, client relationships are important to me. I am vested in my clients’ well-being and care about the outcome of their decisions. In the case of these individuals, we discussed spending, budgeting and retirement projections on a regular basis. More so than most. In all three situations, the clients were well-aware that if they continued with their spending habits and lived to an average age in retirement, their investments and retirement accounts would be depleted before their deaths.

About 40% of all U.S. households where the head of the household is between 35 and 64 are expected to run short of money in retirement, according to a 2019 report by the Employee Benefit Research Institute. Additionally, we are living longer than our ancestors. In 1940, the life expectancy of a 65-year-old was almost 14 years; today it is just over 20 years.

Here are some ways to keep the money flowing.

Plan ahead

Planning ahead by identifying goals and objectives and the impact obtaining them will have on your finances is key to a successful retirement.

Retirement will be a time of transition, with many details to consider. Should you purchase long-term care insurance? What are your options for Medicare? Will you be selling a home or business? How will the sale of an asset impact your taxes? Where are you planning on living? Will you be moving to a state with no or low income tax but high property tax? What is your projected retirement income? Identifying what will change in your life during retirement will help you align your planning with your goals and objectives.

Maintain a monthly budget

A budget is a personal plan to manage your money. It provides the opportunity to identify and monitor your spending. Simple as it may be, it is the foundation to sound money management.

Budgeting begins with monitoring a specific period, such as a month. It requires that income and all spending are tracked during this period. A good budget records fixed expenses, as well as the simple purchases we often forget, such as a coffee from Starbucks.

At the end of a period, your budget provides a transparent snapshot of your income and where you spend your money. The key to budgeting is to understand if you have a monthly shortfall or surplus to determine what changes you can make to improve your financial outlook now and during retirement.

Don’t withdraw too much

Conventional wisdom dictates that you should plan to withdraw 4% (adjusted annually for inflation) for about 30 years, from a portfolio that is invested 60% in stocks and 40% in fixed income. This is a very basic rule, and the distribution amount is often much lower than people anticipate.

For an individual who has $1 million saved, under this rule, $40,000 on year one is a safe withdrawal rate. In reality, the amount you should withdraw will depend on many factors such as age, net worth, portfolio allocation and the current economic circumstances. Depending on your situation, the withdrawal rate could be lower than 4%.

Before retiring, understand how much you will need to save so you can transition to retirement without reducing your standard of living. Due to the inevitable volatility of the market, assess your withdrawal and return rates each year to determine if your strategy is still appropriate to meet your future anticipated needs.

Inflation affects buying power

Inflation is the rate of increase in prices over a given period of time. It’s typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Inflation represents how much more expensive the relevant set of goods or services has become over a certain period, most commonly a year. According to the U.S. Inflation Calculator, the annual inflation rate for 2021 was 7%, the highest since June 1982. Inflation is expected to ease to 3% or less by the end of this year. Let’s hope that expectation proves correct.

One problem with inflation is that it affects the purchasing power of cash. If your money is in a savings account paying 0.25% interest, your cash is losing purchasing power because the interest earned is lower than inflation. If your assets do not increase with inflation, your standard of living will eventually diminish due to the erosion of your buying power.

Not just Social Security benefits

Nearly nine out of 10 people ages 65 and older were receiving a Social Security benefit as of Dec. 31, 2020. Among elderly Social Security beneficiaries, about 45% of single adults and 21% of married couples rely on Social Security for 90% or more of their income.

According to Social Security’s June 2021 beneficiary data, $1,555 is the average monthly benefit.

Social Security is adjusted for inflation but does not fully supplement the income you earned while working. In 2022, the poverty level for one person is $13,590. The average monthly Social Security income of $1,555 monthly or $18,660 annually is just $5,070 above the poverty line.

Without planning for supplemental income in addition to Social Security during retirement, the daily struggles of living at or near the poverty level could become a reality.

Pay off debt

Ideally, you’ll have paid off all debts — including your mortgage — before you retire. Taking on new debt in retirement because you are living beyond your means is a recipe for disaster.

If you are using debt because you are living beyond your means, this is a red flag with the potential of having a detrimental outcome on your retirement. Evaluate what you can do now to eliminate and manage future debt.