Non-Retirees More Worried Than Retirees About Finances, Survey Finds

Nearly two-thirds (63%) of nonretirees said they fear running out of money more than they fear death, versus less than half (46%) of retired respondents, an Allianz Life study revealed.

Allianz Life released its latest Retirement Risk Readiness study, which showed a significant gap in the financial experience and outlook of younger Americans and their retired counterparts.

The study showed that current retirees feel positive and optimistic about their finances. Meanwhile, those who are 10 or more years away from retirement are worried about their financial future. Those survey respondents who are still in the workforce report a level of financial fatigue that led to poor decisions that could have long-term negative effects.

Fewer than seven in 10 (68%) pre-retirees said they feel confident in being able to financially support their future goals in the latest survey. This is down from 2021, when 75% of pre-retirees said they had confidence in financially supporting those goals. Meanwhile, 89% of retired respondents said they feel confident about funding their future financial goals.

Retired Americans are less worried than pre-retirees about a number of retirement concerns, including:

• Having enough money to do all the things they want in retirement (28% versus 64% of pre-retirees)
• The cost of living increasing and limiting their ability to afford necessities (33% versus 69% of pre-retirees)
• Running out of money before they die (31% versus 65% of pre-retirees)

The financial confidence gap between retirees and pre-retirees is largely due to a lack of planning or preparation, said Kelly LaVigne, Allianz Life VP of consumer insights.

“I think much of that is due to whether or not they were prepared for retirement and how well they've written out any type of a retirement plan,” he said.  "And having a plan in place and knowing what your income can be gives you confidence."

LaVigne said the combination of inflation and market volatility has many pre-retirees running scared right now.

“They’ve seeing their retirement account balances go up and down dramatically over a short period of time. They’re also seeing the cost of gas and food and everything else becoming more expensive. On top of that, they’re seeing a lot of shortages. All of this is making them say, ‘I was expecting to see my investments keep going and my 401(k) keep growing the way it was over the last 12 years. And suddenly it’s not.’”

At the same time, retirees are more relaxed than they were last year about various retirement risks, including:

• Market downturns (47%, down from 65% in 2021)
• Healthcare costs (43%, down from 73% in 2021)
• The rising cost of living preventing them from enjoying retirement (41%, down from 59% in 2021).

While an ongoing “great resignation” makes the headlines, only 42% of retirees in the survey said they retired earlier than expected, down significantly from the 68% last year. Notably, fewer said they retired early due to unexpected issues and a higher percentage were able to retire on their own terms:

The 2022 Retirement Risk Readiness Study surveyed three categories of Americans to get different perspectives on retirement: pre-retirees (those 10 years or more from retirement); near-retirees (those within 10 years of retirement); and those who are already retired. In addition to highlighting the disparity in retirement confidence among Americans, the 2022 study identified how the pandemic has caused financial fatigue, potentially putting non-retirees’ financial future at risk.

During the pandemic, more than one-third (34%) of non-retired respondents said they took money out of investment accounts in favor of cash, and 39% said they reduced the amount of money they were putting into retirement accounts. More than half (54%) said they were spending too much money on non-necessities during the pandemic, with the majority saying they regret the decision.

Despite these actions, non-retired respondents do have a desire to improve their financial decision-making, particularly those who are further from retirement. Nearly half of pre-retirees (48%) said they would like to make a formal financial plan with a financial professional. The same amount said they are interested in purchasing a financial product that provides a guaranteed source of retirement income.

LaVigne said the survey showed the importance of advisors and clients working together to craft a retirement plan.

“It’s important to make sure that you have a written document to refer to every time the market goes into gyrations, and that you have contingencies built into those retirement plans,” he said. “And it’s important to build some protection factors into a client’s portfolio to lower some of their risks.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.