Workers fear retirement more than death, survey finds
A LiveCareer survey reveals widespread financial anxiety and concerns over lifestyle changes.
Retirement traditionally has been something that most people look forward to — relaxation, hobbies, travel. But today’s workers tend to fear it, some more than death.
A recent survey by LiveCareer, a global online resume builder based in Guaynabo, Puerto Rico, uncovered deep-seated anxieties about financial security and the challenges of stepping away from the workforce.
Retirement is scary
Of the workers surveyed, 61% said they fear retirement more than death, and 64% think retirement is scarier than divorce. More than half (54%) said retirement frightens them more than getting fired, while 53% said it scares them more than falling into poor health.
Lifestyle changes are a source of apprehension for workers considering retirement. Almost half of the respondents (48%) worry they will feel disconnected from society in retirement, and 46% worry they will struggle to adapt to a new routine or lifestyle.
Money issues are top of mind for nearly 40% of the survey participants, with 39% fearing that retiring will make them a financial burden to loved ones, and another 39% worrying that they won’t have enough saved for medical emergencies or unexpected costs.
Financial concerns
When asked to name their most pressing retirement worries, 92% of respondents said they are at least somewhat worried they will have to work longer than anticipated because of financial constraints, and 82% expressed having considered delaying their retirement for financial reasons.
Other financial worries:
- 59% cited the rising cost of long-term care as their top concern.
- 52% fear making poor investment decisions and losing retirement funds.
- 45% worry about maintaining their desired standard of living in retirement.
- 44% fear potential shifts in government benefits.
- 41% report feeling insecure about the stability of their investments.
- 41% are concerned about medical expenses.
- 30% fear inflation.
Debt is yet another factor that can increase workers’ fears about retirement. The survey showed that 82% have debts that could affect their retirement: 44% have credit card debt, 41% have car loans and 39% have medical debt. Of those in debt, 35% have debts exceeding $100,000.
These results are not surprising, Bárbara Carbonell, Wellbeing manager for Aon in Puerto Rico, told News is my Business.
“It is consistent with the data we have collected,” she said. “People are particularly worried about being a financial burden to loved ones and about not having emergency funds to take care of their health.”
According to Aon’s Global Wellbeing Business Impact Puerto Rico Report, 62% of the local employers interviewed said the inability to save for the future affects their employees, and 43% said financial struggles are among the top issues that affect their employees’ well-being. In Puerto Rico, 29% of workers live paycheck to paycheck, Aon reported.
The employers surveyed were asked to choose up to five issues that directly affect employee well-being. Financial risk and stress was chosen by 50% of respondents, coming in third after mental and emotional health (67%) and burnout (58%).
Unrealistic expectations
The LiveCareer survey revealed a significant gap between workers’ expectations regarding retirement and their current financial realities.
Of the individuals surveyed, 80% said they plan to retire in their 60s, with 46% aiming to retire in their early 60s (between ages 60 and 65), and 34% planning to retire between ages 66 and 70. Ten percent said they plan to retire before age 60, and 9% expect to retire between ages 71 and 75.
When asked how much money the respondents would need for a comfortable retirement, 6% predicted they would need less than $100,000; 26% said they would need $100,001 to $250,000; 27%: $250,001 to $500,000; 23%: $500,001 to $750,000; 14%: $751,000 to $1 million; and 4%: more than $1 million.
However, their current retirement savings often did not align with these expectations: 27% have saved $10,000 to $50,000 for retirement, while 24% have saved $50,001 to $100,000. Another 24% have $100,001 to $200,000 in retirement savings, followed by 14% with $200,001 to $500,000, 5% with $500,001 to $1 million, and 2% with more than $1 million. Three percent have saved less than $10,000, and 1% have nothing saved for retirement.
According to The Wall Street Journal, assuming an inflation rate of 4% and a conservative after-tax rate of return of 5%, workers should aim for a savings target of $1.3 million to fund a 30-year retirement that begins at age 67. This would give them an investment portfolio that produces about $50,000 a year in income.
Fidelity Investments offers the following guideline: Save at least one time your salary by 30, three times by 40, six times by 50, eight times by 60, and 10 times by 67.
Most survey respondents (87%) said the COVID-19 pandemic significantly affected their ability to save for retirement, and 82% cited inflation as the main obstacle to reaching their retirement saving goals.
Only 42% said they feel highly confident they’re on track to save what they need for retirement.
Change of plans
Due to a lack of savings or confidence in retiring comfortably, 43% said they plan on retiring from full-time work but continuing part-time in their field for as long as possible, and 29% plan to retire from their current profession and take a part-time job in a different field.
“Isolation and loneliness is another issue,” Carbonell said. “Recently, the surgeon general declared an epidemic of isolation and loneliness that is deeply affecting the general public, including retirees.”
Last year, U.S. Surgeon General Vivek Murthy declared a national loneliness and social isolation epidemic. He warned that about half of U.S. adults experience considerable levels of loneliness, which can affect physical, mental and societal health.
“We’re seeing more people, especially seniors who have retired, trying to re-enter the workforce, searching for work because of inflation, financial burdens, and not being physically, psychologically and emotionally prepared for retirement,” Carbonell said.
Need for education
Carbonell mentioned a study by San Juan-based Academia Claridad Financiera showing that 70% of workers in Puerto Rico do not feel financially prepared for retirement. According to this study, 95% of them have debts compared to 70% on the U.S. mainland, 70% don’t have three months’ worth of savings, and 50% don’t have $1,000 in savings.
“All of this stems from a lack of adequate financial education. Unfortunately, in Puerto Rico, comprehensive financial education is very limited,” she said.
Carbonell offered several ideas for workers to tackle their retirement fears, including seeking financial education provided by employers, organizations such as Academia Claridad Financiera and government agencies.
“People are not adequately educated about finances. For example, employees often don’t join employers’ retirement plans because they’re focused on today and don’t recognize the benefits of those programs. They have difficulty saving money, and even when they save, they have no idea how much money they’ll need to retire [or] how long their savings should last,” she explained. “With proper education, they can manage their money better and achieve more financial stability.”
The financial struggles of employees also affects employers in terms of productivity, engagement and turnover. “It benefits them to have talent and compensation strategies to educate their workers and help them understand their benefits and make better financial decisions,” she said.
“Ultimately, the most important element for a successful retirement is that people educate themselves about it — and not superficially. Employers should facilitate financial education as part of their wellness programs and human resource strategies,” Carbonell said. “These efforts will make all the difference in how workers address their retirement fears.”
