Pete retired after 22 years in uniform and went straight into a defense contractor role. The hours are long, the travel never lets up, and the paycheck is the largest he has ever seen. His military retired pay arrives every month as his Thrift Savings Plan keeps growing, keeps compounding. On paper, he could step away tomorrow. In practice, he can’t bring himself to do it. This is the most money he has ever made, and one question keeps coming back: what if it isn’t enough? He knows he can only keep this pace for so many more years. After that, whatever he has saved is what he will live on for the rest of his life, and he hopes it lasts.
Versions of this story come up often in Formynder planning conversations. Sometimes the job is a high-paying corporate role, and sometimes it is a demanding federal position. Sometimes the person is a retired service member and sometimes a retired federal employee with 30 years of service. The fear underneath is always the same.
That fear is common. The 2026 Annual Retirement Study from the Allianz Center for the Future of Retirement found that 67% of Americans worry more about running out of money than about death, up from 57% in 2022.
For military retirees and federal employees with a pension, though, the fear of running out of money often doesn’t match the math. A pension combined with Social Security creates a reliable monthly income for life. For many households, the bigger risk is spending their healthiest years working out of fear rather than by choice.
Why the Fear of Running Out of Money Persists, Even With a Pension
Military and federal careers reward preparation. Service members plan for the worst case, carry extra supplies, and build in a margin for error. Those habits serve people well in uniform and while building savings. They don’t switch off automatically on the day they take off the uniform.
Research shows how strong this pull is. A study by the Employee Benefit Research Institute (EBRI) tracked retirees over their first two decades of retirement. It found that most retirees limited their spending to their regular income and avoided drawing down their savings. Retirees with pensions were the most successful at avoiding drawdowns. Put simply, retirees with guaranteed income are much more likely to underspend than to overspend.
The Optimization Trap: When Planning Becomes a Reason to Keep Working
Many high earners leaving the military put the same intensity into their finances that they put into their careers. They model the perfect withdrawal rate, run Roth conversion scenarios down to the dollar, and debate fund allocations for weeks. Each spreadsheet seems to point toward one more year of work, just to be safe.
Optimization has real value, up to a point. Past that point, it becomes a way to put off a decision. A plan that is 95% optimized and lets you enjoy the next ten years is worth far more than a perfect plan that keeps you at a desk. Releasing the reins means trusting a sound plan enough to stop re-running it every week, and letting your time become the priority.
Your Retirement Income Floor: Pension Plus Social Security
A retirement income floor is the income that arrives every month no matter what the stock market does. For military retirees and federal employees, that floor is usually built from two pieces: a pension and Social Security. Together, they can cover a large share of a household’s essential expenses, and sometimes all of them.
Built-In Inflation Protection
Military retired pay and Social Security both receive an annual cost-of-living adjustment (COLA) tied to the same inflation index. Military retirees, by law, receive the same COLA as Social Security recipients. For 2027, the Social Security Administration announced a 3.6% increase.
Federal pensions also keep pace with inflation, under slightly different rules. Most retirees under the Federal Employees Retirement System (FERS) begin receiving annual cost-of-living adjustments at age 62. When inflation is 2% or lower, the FERS adjustment matches the full increase. In higher-inflation years it is partially reduced, but it still adds meaningful growth to the annuity every year. Combined with Social Security’s full COLA, a federal retiree’s income floor continues to rise over time.
Why Guaranteed Income Changes the Math
More recent EBRI research shows how much a pension matters. Among retirees with modest savings, those without pension income saw their median non-housing assets fall by 89% over roughly two decades. Similar households with pension income saw a decline of only 29%. A pension does more than add income. It protects savings from heavy withdrawals.
Step 1: Run the “Pension and Social Security Only” Test
The simplest way to quiet the fear of running out of money is to look at the actual numbers. This exercise takes an afternoon:
Write down your monthly pension after taxes and deductions.
Add your monthly Social Security benefit, or your estimate from your my Social Security account.
Total your actual monthly expenses, using three to six months of bank and credit card statements rather than guesses.
Compare the two totals.
Illustrative example (hypothetical numbers):
Monthly military retired pay, after tax: $3,600
Monthly Social Security benefit: $2,500
Total guaranteed monthly income: $6,100
Monthly household expenses: $6,700
Monthly gap: $600
In this example, a $600 monthly gap comes to $7,200 a year. For a household with retirement savings, that is a small and manageable withdrawal. For many households, the test shows one of three outcomes:
A surplus: Guaranteed income covers everything. Savings become a cushion for travel, gifts, and surprises.
Break-even: Income and expenses roughly match. Savings handle irregular costs and long-term needs.
A small gap: A modest withdrawal, a few expense changes, or part-time income closes the difference.
For those retiring before Social Security begins, the bridge years may call for larger withdrawals from the TSP or other savings. Knowing that this period has a clear end date makes it much easier to plan for. For more on managing the TSP after service, see Rolling Out of the Military: Do I Have to Roll Out of the TSP?.
Step 2: Take Control of Your Retirement Expenses
Markets, inflation, and tax law are outside your control. Your spending is not. Expenses are often the most powerful lever in a retirement income plan, because every dollar you don’t need to spend is a dollar you don’t need to earn.
Spend on What You Value
Review your spending with one question in mind: does this expense add real value to your life? Streaming services you never open, memberships you rarely use, and habits picked up during busy working years often add up to hundreds of dollars a month. Cutting what you don’t care about frees up money for what you do.
Expenses That Often Shrink or Disappear
Several costs tend to fall away when full-time work ends. These include commuting, work clothing, and retirement plan contributions. A mortgage that is paid off, or nearly paid off, can change the picture even more. Running the numbers without these expenses often reveals a much smaller income need than expected.
Track Spending Without Obsessing
A budgeting app that connects to your accounts can show where your money goes with little effort. Formynder provides clients with a budgeting app subscription for this reason. The goal is awareness, not another optimization project.
Step 3: Close the Gap With Work You Love
Leaving a high-pressure career does not have to mean earning nothing. Part-time, seasonal, or consulting work can easily cover a small income gap. More importantly, it can be work you choose because you enjoy it.
A friend once approached me, somewhat hesitantly. He made the decision to retire from a county government job, but wasn’t sure what came next. When asked what he loved most, the answer came quickly: baseball. I encouraged him to apply for a job at the local ballpark and he got it! Today he scans tickets as fans come through the gates, earns a paycheck, and watches baseball all season long. The extra income fills a small gap in his budget, and the work itself brings him joy every game day.
Step 4: Find Purpose Beyond a Paycheck
For many veterans, the hardest part of retirement is losing a sense of mission rather than losing a paycheck. Purpose can come from many places: serving in your church, mentoring young service members, volunteering in your community, caring for grandchildren, or finally pursuing a long-delayed passion.
Faith offers a helpful perspective here. Ecclesiastes 3:13 reminds readers “that every man should eat and drink, and enjoy the good of all his labor, it is the gift of God.” The rewards of decades of service and hard work are meant to be enjoyed.
Timing matters too. In EBRI’s 2026 Retirement Confidence Survey, 46% of retirees said they retired earlier than planned, and the most common reason was a health problem or disability. The healthy, active years of retirement are not guaranteed to wait.
Frequently Asked Questions (if you scanned)
Can you run out of money in retirement if you have a pension?
Yes, of course, but it is much less likely. A pension and Social Security provide lifetime income that continues regardless of market performance. The main risks come from spending far beyond that income, or from relying heavily on savings before Social Security begins.
How much of my expenses should my pension and Social Security cover?
No single number fits everyone. When guaranteed income covers most or all essential expenses, savings can serve as a cushion rather than the primary source of income. That puts a household in a strong position.
Is it normal to be afraid to spend savings in retirement?
Yes. Research from EBRI shows that most retirees spend down their savings very slowly, and retirees with pensions spend them down the slowest of all.
Deciding to Start Living
The fear of running out of money is real, and it makes sense for people who have spent their careers preparing for the worst. For military retirees and federal employees with a pension, though, the numbers often tell a far more hopeful story than the fear does.
Key takeaways:
A pension plus Social Security creates an income floor that adjusts for inflation and lasts for life.
The “pension and Social Security only” test shows how close your guaranteed income comes to covering your actual expenses.
Spending is the part of the plan you control most, and trimming what you don’t value lowers the income you need.
Part-time work you love can close a small gap while adding joy and structure to your week.
Purpose can come from faith, family, service, and community, with or without a paycheck.
At some point, one more year of work and one more round of optimizing stop adding security and start costing time. That time is the one resource that can’t be earned back. Stepping away from a demanding career can be a deliberate decision backed by real numbers, made while you still have the health and energy to enjoy what comes next.
Disclaimer: This article is provided for educational, general information, and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, investment advisory services, or legal advice regarding estate matters. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Read the full disclosure.