As baby boomers continue to reach retirement age, more and more people are transitioning into their golden years. While retirement should be an exciting and relaxing time, many retirees find they still have some big concerns weighing on their minds.
Will I have enough money saved for retirement?
One of the most common worries retirees face is whether they have adequately saved and planned for retirement. With Americans living longer than ever, retirements can last 20 years or more. Making sure your retirement savings and income will sufficiently cover expenses for that long of a time period is a major issue.
According to a 2021 study, 46% of current retirees say that running out of money is their top concern. With life expectancies rising, healthcare costs increasing, and interest rates on retirement savings remaining low, this concern is understandable.
To help allay fears about running out of money, retirees should take steps such as:
- Calculate their expected monthly and annual retirement spending needs
- Evaluate if their current savings and income sources can realistically cover those needs for 20+ years
- Create a retirement budget to align spending with income
- Have a retirement savings withdrawal strategy using reasonable annual rates
- Plan for large expected future expenditures like healthcare
- Consider downsizing, relocating, or part-time work to help income and savings last longer
- Consult with a financial advisor to help analyze savings adequacy for the long-term
Retirees who are proactive in their financial planning can have greater confidence that their money will last as long as needed.
Will I be able to afford healthcare and prescription drugs?
Another major area of concern for many retirees is being able to afford quality healthcare and prescription medications on a fixed income. Healthcare costs have significantly outpaced general inflation for years, and paying for healthcare is the top financial concern among retirees according to surveys.
Those over 65 in the U.S. generally qualify for Medicare to cover a portion of healthcare costs. However, items not covered by Medicare like deductibles, copays, dental, hearing, vision, and long-term care can still be substantial expenses. The average 65-year-old couple retiring in 2021 was estimated to need around $300,000 just to cover healthcare costs in retirement.
Prescription drugs can also be a significant expense in retirement. Average annual drug costs for seniors range from around $2,000 to $8,000 depending on the source. And those amounts are expected to continue increasing over time.
To help cover these sizable healthcare costs, retirees can:
- Research Medicare supplemental, Advantage, and Part D plans to find coverage that fits medical needs and budget
- Sign up for health savings accounts before retiring to save for healthcare tax-free
- See if former employer provides any retiree health benefits
- Investigate if state-specific programs are available to assist with healthcare costs
- Ask doctors and pharmacies about money-saving generic drug options
- Shop around and negotiate costs for any uninsured medical expenses
- Consider relocating to a country with lower healthcare costs
- Work part-time if eligible for employer health benefits
Taking advantage of all options and planning ahead for healthcare expenses can help retirees afford these costs in their budget.
Will I still be able to afford my current lifestyle?
Transitioning from steady income during their working years to living solely off retirement savings and Social Security income can be an adjustment for many retirees. Some find that their retirement lifestyle expectations do not match their actual income and savings levels.
Survey data shows that 46% of current retirees say that maintaining their current lifestyles is a main concern. Retirees used to steady income can struggle to adapt to covering expenses entirely from retirement accounts that are designed to be drawn down over decades.
To help align retirement lifestyles with financial realities, soon-to-be retirees should:
- Audit monthly spending a year or two before retiring to categorize essential vs. discretionary expenses
- Create a retirement budget based on projected income sources to see if it sufficiently covers expense needs
- Eliminate unnecessary spending and find ways to save on essential costs before retiring
- Downsize home or relocate to reduce housing expenses in retirement
- Delay retirement a few additional years to increase Social Security and retirement account balances
- Consult with a financial planner to run retirement income projections for your specific situation
With proper planning, testing of budgets, and expense discipline before retiring, maintaining an enjoyable lifestyle can be more achievable.
Will I be lonely or bored?
Beyond just financial concerns, many retirees also worry about issues like boredom and loneliness. Going from the social atmosphere and productive work of a full-time career to having abundant free time can be a challenging transition.
Surveys show anywhere from 25-50% of retirees struggle with boredom, difficulty structuring time, and lack of purpose on a daily basis. Retiring singles are also more susceptible to loneliness, with 65% of retired single older adults identifying as lonely according to research studies.
To help prevent these issues, retirees can:
- Find a part-time job or volunteer opportunities to stay active and engaged
- Take up a new hobby or resume an old favorite to have enjoyable activities
- Travel to new places and cross items off your bucket list
- Spend time with grandchildren or mentor younger people
- Join community clubs, classes, or sports leagues to stay social
- Consider relocating to be closer to family or somewhere with many retiree activities
- Adopt a pet for companionship
- Set up weekly phone calls, video chats or in-person visits with friends and relatives
- Create a consistent routine and goals to add structure to your days
Remaining active, social, and purposeful can help retirees adjust to their new lifestyles and avoid boredom and isolation.
Will I have to support my adult children or elderly parents?
Some retirees end up worrying less about funding their own retirements and more about financially supporting family members. With kids often graduating college with student loan debt and parents living longer, retirees can feel caught in the middle.
Around 3 in 10 baby boomers expect to financially support their parents later in life. Many retirees also provide at least some assistance to adult children who struggle with expenses starting out. In fact, over 50% of millennial adults have received financial assistance from a parent, guardian or grandparent according to polls.
To avoid retirement savings being strained by family support needs, retirees can:
- Have clear conversations with adult children about financial expectations, boundaries, and timelines for support
- Encourage children to work towards independent financial lives and not rely on parent retirement funds
- Assist elderly parents in planning for long-term care needs and applying for assistance programs as applicable
- Consider providing actual care yourself vs. monetary assistance where feasible
- Refer family members to financial counseling resources for improvement of money management skills
- Seek compromise solutions like co-signing apartment leases or auto loans rather than direct gifts of cash
- Be transparent about your own retirement income and savings constraints
With proper planning and communication, retirees can balance helping family while still funding their own retirements.
Will I be able to age comfortably in my own home?
Many retirees have a strong desire to remain living independently in their own homes as long as possible vs. having to move into assisted living or nursing home facilities. However, declining mobility, health changes, and maintenance needs as you age can jeopardize that goal.
Making sure their current home can support them through their 80s, 90s, or even longer is a key retirement concern, especially for single retirees lacking a partner to depend on. Simple everyday tasks like cooking, cleaning, and home repairs can become difficult. Only 9% of older Americans end up able to stay in their homes until they pass away, according to research.
Retirees hoping to age in place can make preparations like:
- Pay off mortgage and other debts to reduce expenses
- Renovate home ahead of time with features like walk-in showers, railings, single-floor living, and lever door handles
- Declutter and organize home with easy access to frequently used items
- Live near family or friends who can assist with upkeep and provide social interaction
- Research options like meal delivery, cleaning services, or nurses to provide needed support
- Install a home monitoring system to notify family or emergency services if needed
- Consult with a financial advisor to model different long-term care scenarios
Proper planning and proactive modifications can allow more retirees to comfortably and safely stay in the homes they know and love.
Will I leave enough money to my heirs?
Retirees often feel a sense of responsibility to leave an inheritance to loved ones and future generations. But with people living longer retirements, healthcare costs rising, and low interest rates, retirees may consume more of their savings than originally intended.
According to surveys, around 3 in 10 retirees worry about not being able to leave money for their children, grandchildren, or other heirs. And data shows only about half of retirees do end up leaving any assets to heirs.
Retirees who desire to pass on an inheritance can take steps like:
- Review retirement spending annually and adjust withdrawals if able to leave more savings
- Purchase an annuity to cover late retirement years and preserve savings for heirs
- Discuss estate planning options like trusts with an attorney
- Take advantage of allowable annual gift tax exclusions
- Consider purchasing life insurance to create an instant estate for heirs
- Invest in retirement accounts like Roth IRAs that pass to heirs tax-free
- Reduce expenses and optimize Social Security claiming strategies to conserve more savings
While far from guaranteed given uncertain lifespans and spending needs, focusing on estate planning strategies can help retirees feel more confident about being able to leave money to loved ones.
Will I stay mentally and physically active?
Remaining vibrant and healthy is a common goal among retirees, but it can also be a challenge. Keeping an active mind and body becomes harder with age, but it is key for enjoyment of retirement.
Many retirees worry about declining cognitive and physical health. Typical age-related changes like reduced mobility, loss of balance, memory lapses, slower information processing, and vision/hearing loss can lower quality of life.
Steps retirees can take to stay active and engaged include:
- Regularly exercising – walking, swimming, golf, tennis, classes, yardwork
- Eating healthy nutrient and antioxidant-rich foods
- Practicing relaxation techniques to reduce stress
- Learning new skills and hobbies or take educational courses
- Doing puzzles, reading books, and playing games to challenge the brain
- Volunteering or mentoring to stay mentally engaged
- Getting recommended health screenings and flu shots
- Treating any medical conditions like diabetes, hypertension or arthritis
- Quitting smoking and limiting alcohol intake
- Spending time with energetic friends and family
Making physical and mental wellness a priority allows retirees to get the most from their later years.
Will I find the right living arrangement if unable to stay home?
As mentioned previously, eventually aging to the point of needing assistance with daily living tasks yet wanting to avoid nursing homes is a common retiree fear. Finding the right intermediate senior living option provides peace of mind.
Living choices like independent living communities, assisted living facilities, adult day care centers, or moving in with family are alternatives retirees consider when they can no longer age comfortably at home.
To find the right living arrangement, retirees should:
- Tour multiple options to evaluate which best fits your needs and preferences
- Calculate all-inclusive costs to determine if affordable long-term
- Read reviews, talk to other residents/families and check state quality data
- Determine what services and amenities are most important
- Consider proximity to family members who can visit regularly
- Look for vibrant social activities to maintain engagement and happiness
- Weigh benefits and tradeoffs of different arrangements
Selecting future housing that enables both independence and support provides significant retirement peace of mind.
Conclusion
The retirement years hold great potential for enjoyment, relaxation, and new adventures. However, as illustrated above, retirees still face an array of concerns that can detract from that if not properly addressed.
Being proactive before and during retirement to manage expenses, maintain health, stay active, and plan for the future is critical. Seeking guidance from financial advisors, doctors, family, and retirement resources can help provide solutions. With prudent preparations and an optimistic outlook, today’s retirees can find the right balance and approach to minimize worries and live out satisfying retirements.