More Americans Are Worried About Running Out of Retirement Funds Than Dying, Survey Reveals -- GOBankingRates

Press Release from Financial Wellness Strategies

April 16, 2024 Written by Yaël Bizouati-Kennedy

Sticky inflation, soaring rates and the resumption of student loan payments have taken a toll on many Americans’ ability to save for retirement. And now, these factors — coupled with concern around Social Security and taxes — are prompting many Americans to say they are more worried about running out of money in retirement than dying.

A new 2024 Annual Retirement Study from Allianz Life found that an eye-popping two in three Americans — 63% — said they worry more about running out of money than death. And this fear is on the rise: the figure is up from 57% in 2022, Allianz noted.

“More and more, Americans are afraid of running out of money,” said Kelly LaVigne, VP of consumer insights, Allianz Life Insurance. “At the same time, the responsibility for retirement savings is increasingly placed on workers as pensions have gone away. This increased worry could be a result of that increased responsibility.”

What Are the Drivers?

The top driver of this sentiment is inflation — with 43% of Americans citing it. This was followed by Social Security not providing as much financial support as it should, at 24%, as well as high taxes — 22%.

In terms of generations, Gen Xers are the most concerned — 71% said they are more worried about running out of money than death, compared to 64% of millennials and 53% of boomers.

Bobbi Rebell, CFP, founder of Financial Wellness Strategies and author of “Launching Financial Grownups: Live Your Richest Life by Helping Your (Almost) Adult Kids Be Everyday Money Smart,” argued these findings are not surprising.

“We see stories about rising inflation all the time these days and we feel it in our everyday lives, so it is causing us to worry,” she said. “Inflation is also something where we often feel a loss of control because it is a systemic issue. It is out of our control.”

She added that these same feelings can also be tied to Social Security and taxes.

“We have no choice, since they are set by the government, to accept them. We can only adjust our own spending habits,” she added. “Given that what we often crave as humans is security and certainty, it makes sense that creating an income stream that is reliable will make us feel better.”

Ben McLaughlin, U.S. president at Raisin, echoed the sentiment, saying after years of inflation and the cost of living increasing, many people are finding that what they have budgeted for retirement isn’t going to go as far as they’ve planned.

“The purchasing power of one dollar has gone down 7.1% from 2021 to 2022,” said McLaughlin. “Couple that with rising costs across the board — food, utilities, rent — and it’s no wonder that people are worried about affording the basics once they retire.”

What Can Americans Do To Alleviate Concerns?

According to Allianz’s LaVigne, one of the most important things people can do to alleviate this worry is to have a plan for retirement and write it down — it doesn’t matter how much you have saved away for retirement if you don’t have a plan for it.

“A strong retirement strategy will help ensure you are prepared with your finances so that your money can last your lifetime,” he said.

In addition, he argued the good news is that Americans can use risk management strategies, including annuities in their financial plans to address risks such as inflation and uncertainty around Social Security.

“An annuity can provide guaranteed lifetime income that can help address worries about running out of money,” he said. “Some products also have features for increasing income payments that can help offset the effect of inflation on a retirement strategy.”

Other experts noted one of the most important pillars of a solid retirement plan is creating enough guaranteed income to cover all projected essential expenses in retirement.

“If pensions or Social Security fall short, then adding more guaranteed income through annuities or other products is necessary,” said Stephen Kates, CFP, principal financial analyst at Annuity.org.

He argued lifetime guaranteed income is insurance for longevity, and it is no less important than insurance for death or disability.

“No one knows how long they will live, when they will die or if they may become disabled. These kinds of risks are meant for insurance protection and demand that retirees consider that in some cases, they cannot save enough or work long enough to completely eliminate the risk of outliving their money,” he added.