Report: These Are the Biggest Retirement Fears for Americans

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While there’s no doubt about the emotional toll the COVID-19 pandemic has had, the financial damage has been just as great for many of us. As a result, many Americans — even younger ones — are concerned about their finances post-retirement.

That’s one of many conclusions from the latest Retirement Survey for Workers, a report by the Transamerica Center for Retirement Studies, a group funded in part by the Transamerica Life Insurance Company.

The survey focuses on how workers in the United States are coping with the effects of the pandemic on their health, employment and finances as well as retirement planning.

Worried About Retirement? Read This

Among the fears expressed by American workers, three of the most frequently cited in the report are:

  • Outliving savings and investments (42%)
  • Declining health that requires long-term care (39%)
  • Reduction or elimination of Social Security benefits in the future (38%)

In this article, I’ll discuss those fears and recommend plans of action from money expert Clark Howard.

Outliving Savings and Investments

Predictably, the survey finds that Baby Boomers and Generation Xers — 46% of respondents in each of those age groups — are more fearful of running out of money for retirement than younger generations: 41% for Gen Zers and 37% for Millennials.

Baby Boomers and Gen Xers are also more likely to be concerned about cuts or the demise of Social Security (42% each), which I’ll discuss more later.

What You Can Do Right Now

If you don’t have one already, Clark recommends that you create a budget that allows you to spend within your means while still saving some money every month. Once you have a savings plan in place, you can invest any excess money in a variety of ways.

If you’re in your 50s and haven’t begun saving for retirement, he says you shouldn’t make the mistake of thinking it’s too late. 

“The most important message I try to give people in their 50s is ‘no guilt trip,’” Clark says. “Whatever you’ve been able to do, whatever you’ve done, that’s what you’ve been able to do up to this point. From here, it’s all about where you are now and how you’re going to move forward.”

When it comes to investing, here are some strategies you can put into action.

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Invest in Target Date Funds

One investment vehicle you should look into is target date retirement funds, which Clark calls “the best and easiest investment choice” for many people. Here’s what to know about target date funds.

Get the Most Out of Your 401(k) Match

If your employer offers to match your 401(k) contributions, make sure you’re putting in enough each month to get the maximum company match.

Workplaces typically match 50% of what you put in up to a certain percentage of your salary. That means if you contribute 6% of your annual salary to your 401(k), your employer will chip in 3%. Here’s what to know about a 401(k) match.

More Resources: How To Save and Invest the Clark Howard Way

Declining Health That Requires Long-Term Care (39%)

The #1 negative phrase association among survey respondents was “health decline” (19%). 

Nearly one-third of U.S. workers fear cognitive decline and deterioration of their mental faculties (32%) as well as not being able to afford the necessities (32%), according to the survey.

While health care is a major concern, expenses such as transportation and housing can eat into your retirement budget as well.

What You Can Do Right Now

Clark suggests taking a proactive approach to health care by regularly exercising and doing what you can now to save money on health-related costs. Here are some ways to save on health care costs:

“HSAs are really neat,” Clark says. “They are both a tax-advantaged and tax-free savings account for medical expenses. It is a great deal under the tax code.”

Resource: How To Save on Medical Costs

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Reduction or Elimination of Social Security in the Future (38%)

How long will Social Security last? Nobody knows for sure, although some recent estimates say somewhere around the mid-2030s. But that’s something neither you nor I can control.

“There’s no need to panic about Social Security coming up short of money, because it’s not like Social Security will go from paying what it pays out to zero,” Clark says. “It means in the future, the program will have to trim its benefit some or increase taxes some in order to continue to pay the benefit people have expected.”

In the meantime, why not focus on what you can control?

What You Can Do Right Now

  • Get out of debt: Clark wants you to eliminate debt in three years or less. Here’s how.
  • Take on a side job: Our Work from Home Guide is a great place to find vetted job opportunities to add to your income.
  • Start an emergency fund: Insulate your finances by putting aside money for emergency situations. That way, when something happens you won’t have to dip into your savings to cover it.

“You and I are the ones who have to save money outside of what we expect from Social Security in order to be able to live with some level of comfort and security,” Clark notes.

Although you can qualify for Social Security benefits as early as age 62, Clark advises that it’s best to wait if your circumstances allow.

“Every year that you wait, you get an additional 8% in your check,” he says. “And once you start taking it, every increase is based on the base that you started at. So you end up with a lot more money to live on later in life if you wait to take Social Security.

If you can’t wait until 70, try to put it off at least until your full retirement age. Here’s how to find out what your “full retirement age” is.

Final Thoughts

Although the survey focused on a lot of fears that Americans in various age groups face, it also indicated that nearly 75% of American workers are confident in their ability to retire comfortably.

And Clark says it’s very possible if you have a plan. 

“Retirement affords you a life of freedom, and freedom is not doing nothing,” Clark says. “Freedom is spending your life doing things you enjoy.”

More Retirement Resources From Clark.com:

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