Majority of Americans Fear Running Out of Money in Retirement, According to Survey

A study reveals that inflation, market instability, and persistent financial crises complicate retirement planning. This raises the unsettling question: are we on the precipice of a looming retirement crisis in America?

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Majority of Americans Fear Running Out of Money in Retirement, According to Survey
5 Min Read June 5th, 2023 Updated:July 14th, 2023

In a startling revelation, a recent survey discloses a deep-seated fear gripping 61% of respondents: the prospect of outliving their money looms larger in their minds than the inevitability of death itself.

Retirement planning in America has taken a sharp turn due to factors such as inflation, market volatility, financial crises, and worries over bank stability. A recent study by Allianz Life Insurance Company of North America suggests that these challenges have created a new retirement landscape that could alter the long-term perspective of many Americans.

Many Americans could be risking their financial future to survive today's financial complexities. For instance, previous financial crises have led 46% of respondents to decrease or stop their retirement savings, with no plans to increase these savings in the near future. Meanwhile, nearly half of the respondents expressed concern over everyday costs escalating to the point where they can't afford basic necessities - a figure that has grown steadily over the past few years. 

Many Americans Lack Concrete Plan for Retirement

In an alarming admission, around 40% of Americans acknowledge that their retirement strategy has been thrown off course, and they're uncertain about how to regain their footing. While there are various federal programs and loans for senior citizens, these options are usually used as a last resort, so they don’t give people confidence in the future. Most people say that they want to have a sufficient nest egg amount to feel backed and covered. But it’s not always easy to choose and follow the right budgeting strategy.

Despite 61% of Americans confessing they fear outliving their money more than they fear death, many aren't taking the necessary steps to ensure a financially secure future and retirement. According to the report, a large proportion of Americans lack a concrete financial plan for their retirement. 

Even basic retirement planning seems a daunting task for many, while only a smaller percentage have a written financial plan in place.

Kelly LaVigne, Vice President of Consumer Insights at Allianz Life, stresses the importance of a sound financial plan. 

People's retirements are too important to leave to chance. Proper planning is crucial, now more than ever, to securing your retirement goals, especially in these uncertain times.

The Allianz Life study also reveals distinct generational differences in attitudes toward retirement. Many boomers feel more financially secure compared to previous generations, while younger generations express pessimism about their financial futures. A high percentage of millennials and Gen Xers believe they're lagging behind their parents in achieving life milestones like home ownership.

Consequences of Future Long-Term Health Care Complicate Planning

While not explicitly addressed in the study, this uncertainty becomes even more significant when someone considers the impact of future long-term health care on a future retirement plan.

The cost of long-term care is rising rapidly, which has a substantial impact on families and individuals. Long-term care is expensive, and many people have not planned for these costs. This can lead to financial hardship and can also impact lifestyle and legacy.

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Rising long-term care costs can also impact lifestyle. People who need long-term health care may have to give up their homes and move into a nursing home or assisted living facility. This can be a difficult adjustment leading to loneliness and isolation.

For example, a woman who needs help with bathing, dressing, and cooking may no longer be able to live safely in her own home. She may need to move into a nursing home or assisted living facility, where she will have to share a room with other residents and eat meals in a dining hall.

While in-home can be brought in, it is also expensive, and traditional health insurance and Medicare won't pay for most of these expenses. Medicaid is limited to individuals with little or no income. Long-Term Care Insurance will pay for quality care in any setting, but it must be purchased when someone has reasonably good health.

GenX Pressured

Generation X is feeling the pressure to plan for retirement. Unlike Millennials, who have time to save, and Baby Boomers, who are already in or nearing retirement, Generation X is in a precarious position. Their confidence in their financial stability is the lowest among the generations, and they lack clarity on the mechanics of retirement savings. 

Moreover, this generation is waking up to the reality that they may be running out of time to effectively plan their retirement.

Generation X (defined by the U.S. Census Bureau as those born between 1965 and 1980) is attempting to do a lot at once: fund retirement accounts, purchase Long-Term Care Insurance, fund their children's college educations, and even provide caregiving for older parents who did not purchase insurance or have financial resources to pay for quality care options.

These are all critical activities, but often one or more of these priorities are left ignored. Ignoring funding your 401(k) or purchasing Long-Term Care Insurance can have long-term consequences. Both should be accomplished one way or the other.

If your employer offers a 401(k) plan with a matching contribution, be sure to take advantage of it. Long-term care insurance can be very affordable, depending on the insurance company you choose and the benefit levels you select.

How Much Does Long-Term Care Insurance Cost?

When exploring Long-Term Care Insurance options, it's essential to consult with a qualified specialist in the field. Premium costs and underwriting standards can differ substantially among different insurers. 

To ensure you receive all the associated consumer protections, regulated benefit triggers, and tax incentives, opt for policies that comply with Section 7702(b) federal guidelines. Be aware that many employer-provided plans, though convenient, may not meet these guidelines and tend to be costly. 

What Are Long-Term Care Insurance Regulations? How Do They Protect Policyholders?

Remember, you control the amount of money you contribute to your 401(k and the benefit level and premium of an LTC Insurance policy. With proper planning, you can meet all your goals and avoid the possibility of running out of money once you retire and becoming a burden on those you love.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

A comprehensive retirement plan should address the future costs and burdens of long-term health care, as the cost of care has been rising steadily and is expected to continue to do so.

Long-term health care is expensive, and the impact on your family and finances can be considerable. Often, people fail to plan, so they may have to rely on Medicaid (for those with little or no income and assets) or family members to become caregivers.

A comprehensive retirement plan should include a strategy for funding long-term health care costs, such as Long-Term Care Insurance, to safeguard income and assets and reduce the burden and stress otherwise placed on loved ones.

Most people get coverage in their 40s or 50s as part of comprehensive retirement planning.

LTC Specialist: The Key to Efficient Policy Selection and Best Value 

When considering Long-Term Care Insurance, your first inclination may be to consult with a financial advisor or a general insurance agent. However, the intricate details of underwriting, policy design, and regulatory compliance require the expertise of a qualified LTC Insurance specialist.

Significant disparities exist between insurance companies in underwriting standards and premiums for equivalent coverage. Long-Term Care Insurance can indeed be cost-effective, but it's crucial to enlist a specialist when seeking guidance and accurate quotes from all the top insurers.

An LTC Insurance specialist streamlines the process, typically conducting their work over the phone or online. They'll inquire about your health, family history, and retirement plans. Subsequently, they'll align your age and health profile with the ideal insurance company, ensuring you receive the most beneficial coverage at the best value.

Find a Qualified Long-Term Care Insurance Specialist

Research Made Easy on LTC NEWS

LTC NEWS offers many tools and resources to help educate yourself on long-term health care planning. This way, you can easily ask more intelligent questions when shopping for coverage. 

Check out some helpful resources:

LTC NEWS Helping You Help Your Older Parents

You may have older parents who are declining due to aging, chronic illness, dementia, or other health and physical issues. LTC NEWS can assist you in finding quality care options. Plus, if they have an LTC Insurance policy, LTC NEWS can assist you in getting their benefits in place from their policy.

Don't delay activating their benefits if they have a Long-Term Care Insurance policy. LTC NEWS and Amada Senior Care are working together to provide free LTC Insurance claim processing and evaluation - no cost or obligation.

Long-Term Care Insurance Claims

Amada Senior Care - Find Care or Start LTC Insurance Claim Free

These comprehensive LTC NEWS guides will help you find quality care options:

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