Young workers might see retirement as a time of freedom and relaxation, but as they get older, anxieties often creep in about their health and the kind of lifestyle they'll be able to afford on a fixed income. There are a lot of uncertainties in retirement, and no amount of planning can take them all away.
But the right strategies can help reduce your risk of serious issues. Below, we'll look at three common retirement worries and how you can ease them.
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1. Outliving your savings
Outliving retirement savings is a big concern, with 38% of workers listing this as one of their greatest fears in a recent Transamerica survey. This isn't all that surprising when you think about the difficulty many people have saving for retirement.
The same Transamerica survey found the median retirement savings for full- and part-time workers was just $67,000. And over a quarter of those surveyed reported having less than $25,000 set aside for their future.
Age plays a factor here. If you just entered the workforce a few years ago and you have already saved $25,000, you're off to a great start. But if you're in your 60s and that's all you have, running out of money in retirement is a real possibility.
Estimate how much you need to save for retirement so you know what to aim for. Ideally, you can reach your monthly savings goal by tweaking your budget. But sometimes, that's not possible.
Consider ways to increase your income if you're not able to save as much as you would like. You could work overtime or negotiate a raise at your existing job. You could also seek a better-paying job elsewhere or pursue additional training that could lead to promotions. Side hustles are another popular way for people to bring in extra cash.
And if none of that works, consider delaying retirement. This might not be ideal, but it'll give you more time to save. Plus, it'll also reduce the years of expenses you need to cover, making your savings target a little more achievable.
2. Declining health
Declining health was the second-most-common retirement fear in the Transamerica survey, and it's concerning on two fronts. Poor health could reduce your quality of life. It can also lead to costly bills, especially if you require long-term care.
Though some health issues are beyond our control, there are steps to take at every age -- exercise and stress management among them.
Take steps to protect your retirement finances, too. Shop around for the best deal on Medicare plans when you're eligible and consider purchasing supplemental insurance, including long-term-care coverage, as necessary.
You can also open a health savings account (HSA) for out-of-pocket medical costs. You're eligible to contribute to one of these as long as you have an individual plan with a deductible of at least $1,500 in 2023 or a family plan with a deductible of at least $3,000. Money you put here reduces your taxable income for the year, and it's tax-free when used for medical expenses at any age.
3. Social Security's future
About 37% of workers in the Transamerica survey cited Social Security's future as a major concern. This makes sense, given that it is a major source of retirement income for many seniors. But the program is in crisis.
Social Security's trust funds are running low. A recent Congressional Budget Office report estimates that the Old-Age and Survivors Insurance Trust Fund, which pays benefits to seniors and the surviving family members of deceased workers, could be depleted as soon as 2032. This would force the government to make benefit cuts if politicians cannot agree on a solution to increase the program's funding before then.
But even in the worst-case scenario, Social Security won't disappear because it still takes in revenue every year from payroll taxes. However, since we don't know what's going to happen, it's best to reduce reliance on the program as much as possible. Build up your personal savings as much as you can, and try some of the tips above if you're struggling with this.
Concerns like the three listed above can't be resolved in a single planning session. Taking some of the steps mentioned here is a great start, but you also have to check periodically and alter your strategy as your lifestyle changes.
And watch for any changes the government makes to retirement accounts and Social Security, since this could affect how you save for your future.
