The Retirement Nightmare: Americans’ Deepest Fear of Running Out of Money

By Doug Young – 22 September 2023

Introduction

In today’s uncertain financial landscape, a recent survey conducted by Allianz Life Insurance Company has unveiled a profound concern shared by a majority of Americans: the fear of running out of money in retirement.

This survey sheds light on the deep-rooted anxiety surrounding financial insecurity in the golden years, highlighting the urgent need for informed retirement planning.

Americans’ Fear of Going Broke in Retirement

According to the survey findings, an astonishing 61% of respondents expressed a greater fear of going broke in retirement than the fear of death itself.

This revelation underscores the significant impact that financial insecurity can have on individuals’ lives. It speaks volumes about the importance of economic stability and the necessity of being prepared for a secure retirement.

Inflation’s Impact on Retirement Security

The survey also reveals that Americans are acutely aware of the potential impact of inflation on retirement security.

Approximately 49% of respondents identified the rising cost of everyday expenses as one of the greatest risks to their retirement income.

This sentiment aligns with the concerns raised by Senator Mike Braun during his Congressional testimony earlier this year. Braun emphasized that inflation is driving more than 40% of older Americans to reconsider rejoining the workforce, as they worry about the impact of both short-term and long-term inflation.

Long-Term Effects of Inflation

To better understand the potential consequences of inflation, it is essential to consider its long-term effects.

As highlighted by a New York Times article, a chronic inflation rate of 5% can cause prices to double over a span of 15 years. Recent data from the Consumer Price Index (CPI) shows that the annual CPI has averaged 6.4% since April 2021, surpassing the Federal Reserve’s two percent target rate.

This suggests a potential 13.5% loss in purchasing power over the previous 28 months, further compounding the concerns about retirement security.

The Permanence of Financial Crisis in Retirement Planning

The Allianz survey also reveals that 56% of Americans now consider financial crises to be a permanent consideration in their retirement planning.

The impact of recent economic turbulence, including the decline in household net worth by roughly $4 trillion in 2022, has made this perspective increasingly prevalent.

Balances in IRAs and 401ks have also suffered, according to data compiled by the Treasury Department.

How Much Did Traditional Retirement Accounts Lose in 2022?

These numbers serve as a stark reminder of the volatile nature of the financial landscape and the need for proactive measures to safeguard retirement savings.

Lessons for Retirement Savers

The survey findings underscore the profound impact of financial insecurity on retirement planning. It emphasizes the need for retirement savers to learn effective ways to diversify and insulate their hard-earned nest eggs.

With the fear of running out of money in retirement deeply ingrained, it becomes crucial for individuals to proactively seek strategies that safeguard their financial well-being.

Exploring options such as diversified investment portfolios, long-term care insurance, and seeking professional financial advice can help individuals navigate the challenges and uncertainties of retirement planning.

Conclusion

The survey findings from Allianz Life Insurance Company illuminate the overwhelming fear many Americans experience when contemplating the possibility of running out of money in retirement. This concern surpasses even the fear of death for a significant majority.

The research underscores the urgency for individuals to prioritize informed retirement planning, considering the potential impact of inflation and financial crises.

By diversifying and insulating their retirement savings, Americans can take proactive steps towards securing a financially stable future. It is through careful planning and informed decision-making that individuals can turn the retirement nightmare into a secure and prosperous reality.