3 of the biggest retirement fears (and how to squash them)

“During the day I don’t believe in ghosts. At night, I’m a little more open-minded.” -Unknown

The ghosts, ghouls, and goblins are ready to haunt tonight! But don’t let any lingering Halloween horrors seep into your thoughts about retirement.  

At Simply Money Advisors we’ve helped thousands of clients retire well over the last 25 years, giving us insight into some of the most common retirement nightmares. Here are three of the biggest... and why they might not be as petrifying as they seem.

Fear #1: Not being able to count on Social Security

Yes, Social Security is facing a funding challenge. While this sounds scary, here’s the truth: it’s not going ‘bankrupt.’ In fact, as long as there is a current pool of workers to pay into the system, the program can never truly go bust.

Even if nothing is changed by 2034 – the year Social Security’s ‘Trust Fund’ is estimated to be depleted – you’ll still receive about 77% of your promised benefit. This means if you were expecting $1,200 a month you would instead get about $925.

Granted, you probably prefer 100% of your promised benefit – but getting something is better than getting nothing.

But this also goes to show how a guarantee isn’t always guaranteed, so don’t plan on relying on Social Security as your only source of retirement income.

Fear #2: Rising healthcare costs

According to recent numbers from Fidelity, the average 65-year-old couple retiring today should expect to spend about $280,000 in today’s dollars on healthcare in retirement (not including long-term care). It will be even more when you retire thanks to inflation.

Does this send a chill up your spine?

If you have access to a Health Savings Account (HSA), consider saving in it now and earmarking the money for future healthcare needs. This money will grow tax-free and also come out tax-free in retirement if used for qualified medical expenses.

Additionally, about 70% of people age 65 today will require some kind of long-term care, spending an average of $138,000 over their lifetime. Take the time to learn about long-term care insurance. While this kind of policy isn’t right for everyone, it could make sense in some circumstances.

But a long-term care policy usually gets more expensive the older you get, so figure out if you need one sooner rather than later. Because waiting too long to make that decision won’t benefit you.

Fear #3: Running out of money

A 2017 study from Transamerica Center for Retirement Studies revealed 51% of those surveyed named outliving their money as their top retirement fear. No doubt this can be an unnerving thought, especially as life expectancies increase – but it doesn’t have to be.

If you’re concerned about being able to afford your retirement lifestyle, you need to face your fear. Take a good, hard look at the current state of your finances. Are you on track to pay down your debt before retirement? Can you save more? Are you taking the proper amount of investment risk?

Even better, seek the guidance of a credentialed financial advisor. A personalized financial plan will analyze all the components of your financial life – including your cash flow (how much is coming in, how much is going out), your investment mix of stocks and bonds, and potential risks to your money – to not only help you get to retirement… but through it as well.

The Simply Money Point

A monster never looks as scary once you turn on a light. The same goes for your retirement plans. If you have fears about what lies ahead, make it a priority to get some answers.

To educate yourself further about retirement planning, Social Security, and how to select a financial advisor, visit our library of free online resources.

Simply Money

Simply Money

Each weeknight at 6pm, Simply Money™ makes money simple for you, with easy to understand and entertaining explanations of how the economy, stock markets and consumer scams may affect your savings, your retirement investments, even plans for your... Read more

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