No. 1: Paltry returns on savings
In June 2006, the federal funds rate, the key interest rate that the Fed controls, stood at 5.25 percent. In September 2007, central bankers began lowering the federal funds rate and continued to do so until it fell to a range of between zero percent and 0.25 percent in December 2008. It remains there today.
Rates on certificates of deposit, money market accounts and savings have plunged in tandem.
The result has been devastating for retirees counting on safe, fixed returns, says Michael Rubin, founder of Total Candor, a financial planning education firm based in Portsmouth, New Hampshire.
"They're earning a lot less on their savings than any other time in recent history," says Rubin, author of "Beyond Paycheck to Paycheck."
However, even getting a sad-sack 1 percent return is better than exposing all your savings to higher risk, says Alan Moore, founder of Serenity Financial Consulting in Milwaukee.
"I look at cash as market insurance," he says. "When the stock market takes a dive, (retirees) don't want to be in the position of having to sell stocks to fund their lifestyle."