A recent survey conducted by life insurance company Allianz reveals a significant concern among Americans regarding financial stability in their later years. According to the survey results, 61% of respondents are more afraid of depleting their savings during retirement than dying.
Allianz conducted its study by collecting information from a group of 1,000 middle-class Americans ages 25 and older. The study defined the middle class as people with investable assets of $150,000 or more or annual incomes of $50,000 if they were single and $75,000 if they were married. The study’s findings highlighted a significant observation: While death is an unavoidable aspect of life, the fear of depleting one’s financial resources in old age strikes a chord with a substantial number of people.
The concern over outliving your financial means is a driving force behind the importance of Social Security, a program designed to provide an inflation-adjusted lifetime annuity that ensures financial stability in retirement.
In a sign of the uncertain financial landscape, 56% of survey respondents now view regular “financial crises” as integral to their retirement planning. Forty-six percent claim their retirement plans have been disrupted by the ongoing crisis that began in March 2020.
Among those surveyed, Generation X appears to be experiencing the greatest financial apprehension. Born between the mid-1960s and late 1970s, Gen X exhibits the lowest overall financial confidence. This is unsurprising, given that they faced three significant economic crises in the first two decades of their working lives: the early 1990s recession, the dot-com crash of 2000-03 and the global financial crisis of 2007-09.
The oldest members of Generation X are approaching age 59, while the youngest are entering their mid-40s. A mere 25% of them believe they still have ample time to save for retirement, a decline from 43% two years ago. Even with new investing avenues opening up, the picture remains bleak. Changes in federal law allow investors to invest in startups and alternative investments through platforms like StartEngine and platforms like Robinhood and Webull allow anyone to manage their finances.
Across all generations, 40% of respondents confess to not having a concrete retirement plan in place and 56% indicate that they are uncertain about where to begin their retirement planning journey, aside from maintaining basic accounts like a 401(k) and an individual retirement account (IRA). While these accounts, when paired with consistent maximum contributions, provide a solid foundation for retirement planning, it’s worth considering alternative avenues for potential big earnings.
As many Americans grapple with the fear of running out of money in their later years, recent economic developments have added to these concerns. The excess savings that American households accumulated over the past few years faced a significant downturn in the first quarter. This noteworthy finding comes from a research note authored by Federal Reserve economists Francois de Soyres, Dylan Moore and Julio Ortiz.
In their comprehensive analysis, the trio defined excess savings as the amount that households hold above the established savings trajectory. These findings shed light on a broader economic context that underscores the financial insecurities experienced by many Americans.
These concerns are not isolated. The economists attributed the decline in excess savings to a series of events, particularly the unprecedented fiscal support measures initiated by governments worldwide in response to the COVID-19 pandemic. The programs, while essential for mitigating the pandemic’s health and economic impact, had a dual effect on the economy. They bolstered consumer spending, yet the production of goods struggled to keep pace with the surging demand.
