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The way retirement is supposed to work in America is something like this: You work hard and play hard (within reason) until you're 65. Then you get to collect Social Security, on top of drawing from the nest egg you've built up over your career. Free from the shackles of a 9-to-5, you can finally do all the things you've been waiting for: spend time with your grandkids, travel across the country in an RV, and hop on a cruise ship (if you dare). But to a lot of people, this story increasingly feels like a fairy tale that's out of reach.
Instead of a golden sunset to look forward to, retirement has become anxiety-inducing for many people — and not just because of the get-old-and-die thing that comes at the end. Millions of Americans are worried they won't be able to retire in the way they'd like, and they're afraid they'll run out of money once they stop working. In a Gallup poll last year, 43% of non-retirees said they thought they'd have enough money to live comfortably once they're ready to hang up their proverbial aprons, and 71% said they were at least moderately worried about being able to pay for their retirement. (It is worth noting that current retirees, as in boomers, feel a lot better about the whole deal.) In a recent CNBC survey, over half of respondents in the US said they thought they were behind on saving and planning for retirement.
The pessimism is understandable: People estimate they need about $1.5 million to live as they want to in retirement, but only a small fraction of savers actually have that amount stashed away. Teresa Ghilarducci, a labor economist at The New School and the author of "Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy," told me that given these expectations, the anxiety is well founded.
"There's nothing irrational about being nervous that you won't have enough money to live on to last your whole life, because most people do not have enough money to last their whole life and maintain their standard of living in retirement," she said.
The burden of saving for retirement — and the anxiety that comes with it — is a fairly new phenomenon. Until the 1980s, American workers generally received money in retirement via defined-benefit plans, such as pensions, where their employers paid them a set amount depending on how long they'd worked at the company and how much money they'd made. Over the past 40 years, however, the approach has changed. Workers have shifted to defined-contribution plans, like 401(k)s and IRAs, where they (and, perhaps, their employers) kick into a fund that's usually invested to help them save up for older age.
There's nothing irrational about being nervous that you won't have enough money to live on to last your whole life.
That system puts the impetus on individual employees to decide how much to save and how to invest it. In his 2024 letter to investors, BlackRock CEO Larry Fink addressed the conundrum. While much of society is focused on helping people live longer lives, he said, there's not much focus on helping them afford those longer lives. The move from pensions to 401(k)s for millions of workers represents an "impossible math problem," he wrote, because it's so hard for people to decipher how much money they'll need and how fast they'll spend it.
"Put simply," Fink wrote, "the shift from defined benefit to defined contribution has been, for most people, a shift from financial certainty to financial uncertainty."
The new system also allows people to dip into their retirement piles if need be — which can be both a blessing and a curse. On the one hand, that money can act as a lifesaver in a preretirement emergency. On the other, dipping into it may mean running out of money down the line.
"It's probably not a great idea to let people draw on their retirement assets before they reach retirement age, but if you don't let people do that, they're not as likely to contribute to a 401(k) plan in the first place," said Norman Stein, a professor emeritus of law at Drexel University's Thomas R. Kline School of Law. "We have basically a savings system with a reasonably strong orientation toward retirement."
Chris Woods, a financial advisor who founded Silvis Financial, based in Charlotte, North Carolina, told me that all this uncertainty is often the reason clients wind up in his office. They're not only worried about having enough money to support themselves in retirement but concerned about all the other financial curveballs life may throw at them in their golden years: what their medical costs might be, whether their children might need help, whether they might get divorced, where they want to live. The overarching theme is having enough money to retire, he said, "and then subsets of that that are unique to families based on health, family, even location and things like that."
There is also a level of doomerism around how the federal government will financially support its citizens in the future as they reach old age. The Social Security trust fund is expected to run out of money in about a decade, and Republicans often talk about making changes and cuts to the program. The GOP sometimes makes noise about scaling back Medicare, the government-administered health-insurance program, too. Regardless of one's political stripes, Social Security and Medicare are enormous government expenses, and given concerns about the country's debt and deficit, it's hard not to wonder whether those programs will remain untouched.
It's not likely that Social Security will just dry up — Congress could increase the retirement age or up the funding for the program. But it's impossible to know whether it will be intact by the time many young people reach retirement. Of course, it could, at least in theory, get better.
"The big debate shouldn't be on cutting benefits," Stein said. "It should be on how we preserve and improve the current system."
It's not just the financials of retirement that are scary. There's a significant emotional weight to it, too. Riley Moynes, a retired educator who wrote the book "The Four Phases of Retirement: What to Expect When You're Retiring," said that for many people, the first year or so of retiring is exciting. They're free from work; they have time to relax and get moving on plans. But that soon shifts. People begin to feel lost. They need to make a conscious effort to reinvent themselves and find a purpose.
"Most of retirement planning has been focused on investments. It's been focused on wills, powers of attorney, and all of that kind of stuff — critically important," he said. "But for the most part, the psychological changes and challenges that people are going to experience, absolutely, are virtually overlooked."
There are so many unknowns that come with retirement: how one will feel emotionally, how they'll feel physically. Money isn't the be-all and end-all, but it's a big part of it. The unknown is unnerving in any circumstance, especially one where the end game is being able to pay for your life until you die — and, if you're lucky, leave some money behind for your family.
The best time to start saving, for many people, was when they were in their teens. The second-best time is now.
Before I started reporting this story, I didn't realize just how freaked out I was by retirement. But after losing some sleep over my financial future, I asked the experts for advice on what to do to assuage my newfound (or at least newly examined) anxiety.
Ghilarducci, the labor economist, said it's important to pay attention to your spending and saving. If you're starting early, in your 20s, you don't have to stash away as much of your income as you do if you're starting later. Invest the money, and make sure the person or entity you're entrusting to oversee that investment is looking out for you. Be careful of conflicted and bad advice. And then there's the democracy aspect.
"You're a voter, and the most important thing you need to know is Social Security and Medicare are the most important sources of income and wealth in retirement," she said. "That means the federal government is the most important financial partner you have."
And listen, if you feel behind, it's not the end of the world. Or maybe it is, but there are concrete steps you can take to try to get on more solid footing.
"It's never too late," Woods said. "The best time to start saving, for many people, was when they were in their teens. The second-best time is now."
Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.