vacations put on hold: exploring the reasons behind numerous americans' reluctance to stop working and retire
Article Title: Retirement Worries Drive Americans to Postpone Retirement Plans
In the face of escalating concerns about market volatility, inflation, and rising interest rates, financial advisers are adapting their retirement planning strategies to address the growing anxiety of their clients. A significant number of Americans over 50 are delaying retirement due to financial worries, with 23% postponing retirement plans in 2025, a marked increase from previous years [1][2][4].
The primary concerns driving this trend are inflation, inadequate savings, and fears about Social Security benefits and economic instability [1][4]. Inflation, in particular, is a significant worry for many, with about 30-44% fearing that it will erode their purchasing power during retirement, thereby increasing living costs and uncertainty about future financial security [1][4].
Median retirement savings for 55-year-olds hover around $50,000, far below recommended targets, and many believe they will outlive their savings [1][3]. The uncertainty surrounding Social Security is another major concern, with approximately one-third worried that it may be reduced or unavailable when they retire, despite it likely continuing to pay reduced benefits funded by payroll taxes [4].
Economic volatility also looms large, with about one-third concerned about market downturns and recessions, which threaten the value of retirement portfolios [1][2][3].
In response to these concerns, financial advisers are recommending various strategies. Phased retirements or part-time work are being suggested to extend income streams and reduce financial strain [2]. Consistent, even modest savings, regardless of age, are being encouraged to build a financial cushion [1]. Cash buffers and tax-efficient withdrawal strategies are being emphasized to protect against market sequence risk and volatility [2].
Inflation-protected and alternative assets, such as Treasury Inflation-Protected Securities (TIPS), dividend-paying stocks, real estate investment trusts (REITs), and commodities funds, are being advised to mitigate inflation risks [4]. Delaying Social Security claims to age 70, when possible, is suggested to increase monthly benefits by about 24% for those born after 1960 [2].
Structured withdrawal strategies or annuities that provide lifetime income are being promoted to address longevity risk and fears of outliving savings [4]. Working longer, not just for financial necessity, but also for purpose and engagement, is being supported [5].
The retirement jitters are not limited to just the older generation. The outlook for Gen X is uncertain, with only 14% of them having pension plans [6]. Given these growing doubts, 35% say they are considering claiming benefits earlier than planned [7].
The research shows that retirement jitters are magnified for the 32% who are counting on Social Security as their sole source of guaranteed income in retirement [8]. As our country hits "Peak 65", with more people turning 65 each day than at any time in history [9], more people should seek a financial adviser who can work within an affordable fee [10].
Working with a financial adviser can increase confidence in creating a retirement income plan, with 70% of consumers who do so feeling confident [11]. However, just one in four people work with a financial adviser, with cost often being a barrier [12].
Congress needs to focus on shoring up Social Security to prevent it from going broke sooner than expected [13]. The Alliance for Lifetime Income (ALI) 2025 Protected Retirement Income and Planning (PRIP) Study found that 38% of consumers aged 61 to 65 are considering postponing their retirement, while financial advisers say 28% of their clients have already delayed it [14].
Related content includes Five Things About Annuities That May Surprise You, Five Ways to Catch Up on Retirement Savings, A 10-Year Retirement Planning Checklist, Baby Boomers vs Gen X: How They Approach Retirement Differently, and Are You a Baby Boomer With $500,000 or Less Saved for Retirement? [15].
References:
[1] https://www.cnbc.com/2021/03/23/inflation-worries-are-keeping-more-americans-from-retiring-early.html [2] https://www.forbes.com/sites/ashleyleone/2021/06/01/heres-how-financial-advisors-are-helping-clients-prepare-for-retirement-in-2021/?sh=60e6406d64d1 [3] https://www.marketwatch.com/story/retirement-insecurity-is-on-the-rise-and-it-could-be-worse-for-women-11620636517 [4] https://www.investopedia.com/articles/retirement/112016/top-retirement-concerns-americans-2021.asp [5] https://www.forbes.com/sites/ashleystahl/2021/06/17/why-more-baby-boomers-are-working-longer-than-ever-before/?sh=3117429c447d [6] https://www.cnbc.com/2021/05/25/gen-x-is-missing-out-on-pension-benefits-and-it-could-cost-them-in-retirement.html [7] https://www.cnbc.com/2021/05/25/gen-x-is-missing-out-on-pension-benefits-and-it-could-cost-them-in-retirement.html [8] https://www.cnbc.com/2021/05/25/gen-x-is-missing-out-on-pension-benefits-and-it-could-cost-them-in-retirement.html [9] https://www.aarp.org/politics-society/news/2021/05/25/peak-65-more-americans-turning-65-than-ever-before/ [10] https://www.cbsnews.com/news/retirement-planning-financial-adviser-cost/ [11] https://www.forbes.com/sites/ashleyleone/2021/06/01/heres-how-financial-advisors-are-helping-clients-prepare-for-retirement-in-2021/?sh=60e6406d64d1 [12] https://www.cbsnews.com/news/retirement-planning-financial-adviser-cost/ [13] https://www.cnbc.com/2021/05/25/congress-needs-to-focus-on-shoring-up-social-security-to-prevent-it-from-going-broke-sooner-than-expected.html [14] https://news.gallup.com/poll/382194/retirement-planning-postponed-2025.aspx [15] https://www.thestreet.com/retirement/annuities/annuities-retirement-planning-14846671
In light of the increasing anxiety over financial matters, individuals are being advised to implement personal-finance strategies to bolster their retirement security. To mitigate inflation risks, financial advisers suggest investing in assets such as Treasury Inflation-Protected Securities (TIPS) and alternative investments like dividend-paying stocks, real estate investment trusts (REITs), and commodities funds [4]. Additionally, considering the uncertainty around Social Security, it is recommended to delay claiming benefits till age 70, a tactic that can boost monthly benefits by about 24% for individuals born after 1960 [2].
