Planning for retirement is arguably the longest investment most people make, so it can feel overwhelming. However, challenging economic conditions can make retirement feel even more daunting.
Americans are beginning to rethink their retirement plans, adjusting their expectations to meet current financial constraints.
Related: Social Security benefits report confirms major changes are coming
Allianz Life Insurance found that 63% of Americans worry more about running out of money in retirement than about death. This apprehension toward retirement underscores the money woes facing all age groups but is most pronounced among Gen X.
71% of Gen X are concerned about running out of money in retirement, as opposed to 64% of millennials and 53% of Baby Boomers.
Inflation has reduced retirement confidence across all demographics
Increased inflation is the most common factor contributing to financial stability and the fear of longevity risk or outliving retirement savings.
More than half of African Americans (52%) and Asian Americans (51%) were more likely to point to inflation as the catalyst for their financial concerns, but white (41%) and Hispanic (39%) respondents also agreed that inflation contributes to the fear of running out of money.
Related: Social Security benefits report confirms major changes are coming
Baby Boomers (48%) were the most likely to note inflation as the top contributor to money stress compared to younger generations, with 44% of millennials and 39% of Gen X agreeing. However, inflation remains the top stressor across all age groups.
Kelly LaVigne, VP of Advanced Market Solutions at Allianz Life, notes the importance of having a long-term financial plan during tumultuous periods.
“Running out of money in retirement is a scary thought,” said LaVigne. “That’s why having a thorough financial strategy for retirement is so important. A financial professional can help you figure out what strategies will work for you and write it down.”
He continues, “A written financial plan can help you ensure you are prepared with your finances so your money can last your lifetime and help ease the concerns you have that you will run out of money.”
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Americans plan on working longer and spending less, as financial security feels out of reach
Current financial challenges are prompting workers to adjust their view of retirement entirely; 47% of Americans view retirement as a slow transition from working full time, and only 38% think about retirement as a set date in the future to stop working.
Shockingly, almost one in five (15%) don’t see themselves ever stopping work and starting retirement.
Related: Dave Ramsey explains how your mortgage is key to early retirement
To combat these mounting fears, workers are taking matters into their own hands and proactively working on improving their financial health before they reach retirement age.
The top methods to avoid outliving retirement savings include:
- Increasing current retirement contributions (41%)
- Cutting current levels of spending to save more (38%)
- Working later and entering retirement later (35%)
- Investing in lifetime annuity plans (35%)
Americans increasingly seek professional financial guidance, focusing on maximizing investment returns, Social Security benefits, and lifetime annuity products.
Related: Veteran fund manager sees world of pain coming for stocks
