Retirees are Terrified About Running Out of Money in Retirement

Both individuals approaching retirement and those already retired share a common concern: growing anxiety about financial security. Worries about running out of money are now at record highs compared with previous generations.

For those not yet retired, the fear centers on not saving enough; for those already retired, the concern is outliving their retirement savings. A recent Morningstar study states that 45% of retirees could exhaust their funds while retired. The risks are especially acute for retirement age single women, who face a higher likelihood of financial shortfalls than either single men or couples. ⁽¹⁾

A 2024 Morningstar study states that 45% of Americans could run out of money in retirement.

Fears regarding depleting your retirement resources are understandable. According to a recent Vanguard study, the average 401(k) balance for Americans between ages 55 & 64 is just $244,750, a figure that falls short of what a majority will need for a secure retirement. ⁽²⁾

Consider these survey results:

More than two-fifths of pre-retirees the Nationwide Retirement Institute surveyed said their dreams for retirement have been delayed, altered or canceled as a result of inflation pressures.
Only two-thirds of employed Americans polled by Voya Financial are highly confident of being on track to retire at their target retirement age.
The Alliance for Lifetime Income found that nearly half of retirees said spending money in retirement gives them anxiety. ⁽³⁾

Over the past five years, investors have faced an extraordinary series of challenges: a global pandemic, three substantial market downturns (2020, 2022, and 2025), the highest inflation rates in four decades, increased global geopolitical tensions, two-decade-high mortgage rates and two highly contentious presidential elections. Taken together, these events have had a profound and cumulative impact on investor confidence and psychology.

Today, more workers are relying on their own savings.

In past generations, a significant percentage of retirees benefited from pensions that provided lifetime income. Today, the landscape looks quite different. Most Baby Boomers (now ages 61 to 79) and many members of Generation X (ages 45 to 60) are entering retirement without the security of a pension. Instead, they must rely primarily on Social Security and their personal retirement plans savings to fund what are now substantially longer lifespans.

There are several ways to reduce financial anxiety, whether you’re nearing retirement or already in it. One of the most effective steps is to work with a financial advisor or schedule a review with your current one. Remember, failing to plan is planning to fail. Yet according to a Nationwide survey, only 40% of people ages 55 to 65 currently work with an advisor.

To alleviate some common fears, you may want to follow this advice:

Determine your safe withdrawal rate — the percentage of your retirement savings you can safely withdraw annually. Currently, most financial advisers recommend a 4-5% withdrawal rate.
Work within a household budget, much like if you were running a business and account for every dollar that is utilized. Or, at a minimum, understand where your dollars are going each month.
Lastly, consider working longer. Only about 28% of US households would experience shortfalls if retiring at 70, compared to 45% if retiring at 65.

Having a financial plan, and working with a financial professional, is critical. Take 2022 as an example: many retirees and near-retirees experienced the shock of a lifetime when the Federal Reserve raised interest rates to combat inflation, sending the S&P 500 down more than 18% by year’s end. Yet those who stayed on plan were rewarded, with the S&P 500 rebounding by 26.3% in 2023 and 25% in 2024.⁽⁴⁾

Working with a financial professional can help you stay on course once retirement begins.

The goal of every employee at WT Wealth Management is to help clients avoid sleepless nights so they can focus on what truly matters: living your best life, enjoying a lifetime of hard work and leaving your legacy to future generations.

WT Wealth Management Learning Spotlights are designed to inform, inspire, and foster meaningful dialogue between our clients and the WT Wealth Management team. Our goal is to demystify complex economic and investment topics, offering clear, practical insights that connect financial theory to real-world decisions.

SOURCES

Beyond the Retirement Crisis Headlines
MorningStar.com
This Is the Average 401(k) Balance for Ages 55 to 64
Finance.Yahoo.com
Most boomers and Gen X-ers are terrified about running out of money in retirement — even if they’re already retired
MarketWatch.com
The 2024 S&P 500 return: Another great year
dqydj.com

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