The deterioration of reservoir bank retaining walls due to prolonged water level fluctuations, soil erosion, and material aging poses a significant threat to infrastructure safety in riparian zones. This study focuses on a typical deteriorated retaining wall section along Changbin Road in the “Two Rivers and Four Banks” area of Chongqing. Numerical models of the retaining structure were developed using the finite element method to assess its stability before and after reinforcement under varying reservoir water levels. The results indicate that a critical water level exists between the design low and high water levels, at which the overall bank stability is most vulnerable. It is recommended that this critical level be prioritized in future slope stability assessments and verifications. The variation patterns of pile displacement, bending moment, and shear force under different water levels were analyzed, demonstrating the effectiveness of the pile–sheet structural system in reinforcing deteriorated retaining walls and providing a valuable reference for similar engineering reinforcement applications.