The majority of Americans polled said that running out of money in retirement was their biggest fear, even more than dying. According to a recent Allianz Life study,* people nearing or in retirement are extremely concerned about economic uncertainty.
Sixty-four percent of respondents said they are more concerned about running out of money in retirement than they are with dying. This trend has continued and worsened since Allianz Life began surveying Americans on the subject in 2022. Kelly LaVigne, Allianz Life’s VP of Consumer Insights, stated that the situation is particularly urgent right now. “The risk is much higher right now than it has been for quite a while,” LaVigne said.
Inflation, Taxes, and Social Security Fuel Financial Anxiety
Americans’ concerns about running out of money in retirement stem from a variety of economic factors. The rate of persistent inflation is at its peak. More than half of the respondents (54%) identified high inflation as the primary cause of financial stress. Despite the fact that inflation has decreased since its peak in June 2022, the cost of necessities continues to rise, putting a strain on household budgets and reducing savings.
Social Security is a major additional concern. Many Americans are concerned that they will not receive enough money each month to support themselves once they retire. In fact, 43% of respondents expressed doubt that they would receive adequate financial assistance from Social Security. Furthermore, 43% of those polled said that high taxes made them feel more anxious.
Sixty-one percent of baby boomers expressed concern about rising costs, making them the generation most vulnerable to inflation. However, 56% of millennials and 55% of Generation X agreed.
Gen Xers Are the Most Concerned About Financial Security
All age groups have concerns, but Gen Xers, or people aged 45 to 60, were found to be the most concerned about running out of money during retirement. Surprisingly, 70% of Gen Xers are concerned about running out of money before passing away. The same fear was reported by 61% of boomers (people aged 61 to 79).
As retirement approaches, Gen Xers are stressed out by rising living costs, volatile markets, and concerns about the long-term viability of Social Security. Furthermore, despite being in retirement, baby boomers continue to face significant financial challenges that make long-term planning difficult.
According to LaVigne, the average American’s retirement income is typically 40% covered by Social Security. People will likely need to rely on other revenue streams to maintain their standard of living, especially given the constant changes in taxes and prices.
Seeking Professional Help Can Make a Difference
Thinking about how much money you’ll have for retirement can be stressful, but it doesn’t have to be. Despite the fact that the financial environment today is fraught with uncertainty, there are ways to take control of your future. Working with a financial expert can help you get through these uncertain times.
Please do not hesitate to contact us if you have any concerns about the stability of your retirement savings. In addition to helping you protect your principal from market fluctuations, our team can help you investigate options that may yield reasonable rates of return over time. Annuities and indexed universal life insurance are two types of products that may provide you with the financial cushion you need to continue saving money in retirement.
*Source: Allianz