Americans are increasingly preoccupied with the financial risks of longevity, according to an annual survey by the Allianz Center for the Future of Retirement. The research, released in April, found that 67% of Americans worry more about running out of money than they do about death.
This sentiment is a consistent trend; in five recent annual surveys conducted by Allianz, the fear of depleting financial resources has surpassed the fear of death every time, with the margin reaching an all-time high this year. The survey included 1,000 adults aged 25 and older with household incomes of at least $50,000 or investable assets of at least $150,000.
“It’s running out of money,” said Kelly LaVigne, vice president of consumer insights at Allianz. “It’s not being able to afford healthcare. It’s not being able to afford long-term care.”
Economic Pressures and Retirement Realities
The rising anxiety surrounding retirement is fueled by a confluence of economic and demographic factors. Life expectancy at birth reached a record high of 79 years in 2024, according to the Peterson-KFF Health System Tracker. While longer lifespans are a positive development, experts note that they do not always correlate with a longer “health-span,” potentially leading to higher long-term care costs.
Other contributing factors include high inflation, rising healthcare expenses, and a decline in the number of workers retiring with traditional pensions that offer guaranteed income streams.
The Transamerica Center for Retirement Studies also released a retirement report in April identifying the top three fears for Americans:
- Declining health requiring long-term care (39%)
- Social Security cuts (38%)
- Outliving savings and investments (36%)
“We can’t overestimate the financial strains that Americans are facing,” said Catherine Collinson, CEO of the Transamerica Center.
The Gap Between Fear and Reality
While sentiment data shows high levels of anxiety, some researchers suggest that the fear of draining a portfolio may be exaggerated. A 2024 study published in the CFP Board’s Financial Planning Review, authored by researchers David Blanchett and Michael Finke, analyzed actual spending patterns rather than survey responses.
The study found that retirees often exhibit a “behavioral resistance to spending down savings.” Instead of relying on their portfolios, retirees typically fund nearly 80% of their lifetime spending through sources like Social Security, pensions, and wages. The data indicated that a typical 65-year-old couple withdraws only 2.1% from their portfolio annually, while a single 65-year-old withdraws 1.9%. These figures are significantly lower than the standard 4% rule often cited by financial professionals.
Proactive Steps for Financial Security
Despite the findings that many retirees underspend, experts suggest that planning remains essential. To mitigate the risk of outliving savings, financial experts suggest several strategies:
- Delaying Social Security: Benefits increase for every year a claimant waits to collect, up to age 70. Experts note that maximizing this lifetime benefit can help cover essential expenses.
- Strategic Planning: Individuals can visit the Social Security website to receive personalized estimates of future benefits and tally their core monthly expenses for housing, food, and transportation.
For those concerned about long-term care, experts advise earmarking a specific financial “bucket” for medical costs or investigating insurance options. As Collinson noted, the challenge remains balancing the reality of increased life expectancy with the financial requirements of the later years.
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