Americans Fear Going Broke in Retirement More Than Death

Most of us worry about our financial future, but a striking new study reveals just how deep this anxiety runs: nearly two-thirds of Americans are more afraid of running out of money in retirement than they are of dying.

This sobering finding from Allianz Life’s recent survey underscores a retirement crisis that has been brewing for years, intensifying amid economic uncertainty. The fear cuts across generations, though Gen Xers express the highest levels of anxiety, with 70% more worried about empty bank accounts than meeting their maker.

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Why retirement fears are hitting new heights

The specter of outliving your savings has always haunted retirement planning, but several factors have amplified these concerns:

Persistent inflation has eroded purchasing power, making it harder to save while simultaneously diminishing the value of existing nest eggs. Though inflation has cooled since mid-2022, the elevated cost of necessities continues to strain household budgets.

Social Security uncertainty looms large in retirement calculations. With benefits typically replacing just 40% of pre-retirement income, many Americans realize this safety net alone won’t support their lifestyle. Recent administrative changes have only intensified doubts about the program’s future reliability.

Tax burdens further complicate the picture, eroding retirement account withdrawals and fixed incomes when every dollar counts.

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The stark savings gap

The fear of going broke isn’t irrational. Americans believe they need over $1.26 million to fund a comfortable retirement, according to research from Northwestern Mutual. Yet the reality falls dramatically short — the median retirement savings sits at just $87,000, based on Federal Reserve data.

This yawning gap between expectations and reality helps explain why retirement fears now overshadow mortality concerns for many Americans. Even baby boomers, many already in retirement, report high levels of anxiety (61%) about financial survival.

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Tackling retirement anxiety head-on

The statistics paint a troubling picture, but there are several practical approaches to address retirement funding concerns:

• Start with a realistic assessment. Rather than fixating on hitting an arbitrary savings target, calculate what your actual expenses might be in retirement. Many financial professionals recommend aiming to replace 70% to 80% of your working income.
• Maximize tax-advantaged savings opportunities through employer-sponsored plans and individual retirement accounts (IRAs). Even modest increases in contribution rates can compound significantly over time.
• Consider working longer if possible. Even a few extra years in the workforce can substantially increase retirement security by allowing continued savings, delaying Social Security benefits (which increases payment amounts), and shortening the overall retirement period that savings must cover.
• Develop multiple income streams for retirement. Beyond traditional savings and Social Security, options might include part-time work, rental income, or annuities that provide lifetime income guarantees.

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Getting help with the journey

Financial professionals consistently advise against letting fear paralyze your retirement planning. Working with a qualified financial advisor can provide clarity and direction, especially during uncertain economic periods.

The retirement equation involves complex variables that benefit from professional guidance, including inflation projections, tax considerations, longevity estimates, and more. An advisor can help develop a sustainable withdrawal strategy that balances growth potential against security needs.

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The path forward begins with acknowledging the reality of retirement readiness and taking concrete steps to improve it. The challenge remains daunting, but a strategic approach can help transform retirement from a source of existential dread to an achievable financial goal.