Monsters under the bed aren't the only thing keeping older adults awake at night. So are fears about retirement, and for good reason. Retirement isn’t cheap; it can easily last more than twenty years and one unexpected illness or bad financial move could derail your plans altogether. Throw the prospect of inflation creeping back up in 2025, concerns Social Security will run out of money and the skyrocketing costs of health care into the mix and it’s understandable Americans nearing or in retirement are losing sleep.
The good news is you can slay those retirement fears and all it takes is some planning and adjustments. “Fears are always surmountable. It’s nothing more than a manifestation of your anxiety bubbling up,” says Pam Krueger, founder and CEO of Boston-based Wealthramp, an SEC-registered adviser matching platform. “The fear is the monster and if you continue to wait and put off doing something about it the stress can kill you.”
When it comes to retirement fears centered around saving, health, sense of purpose and legacy are big ones. Not doing enough in each area can easily conjure up nightmares and keep you tossing and turning. But there are actions you can take to slay those monsters and get a good night sleep in 2025, here’s how.
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Four Retirement Fears Keeping You Up At Night
1. You didn’t save enough in 2024
Everyone knows they should save for retirement, especially the older they get. The general rule of thumb is to stash away 10% to 15% of your annual income in a tax-advantaged retirement saving plan. But not everyone does that, which can lead to nightmares that you may outlive your money. It’s made worse if you don’t know how much you are supposed to be saving.
The solution: Start saving more, even if it’s a small amount.
“We all have a responsibility to save and invest for retirement. Social Security was never designed to support the full cost of living,” says Rob Williams, managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. “To save enough to sufficiently fund the move into making work optional, pay yourself first. Have that money come out of your budget almost as an expense.”
If you have a 401(k) plan, Williams says to make a conscious effort to increase your savings rate in 2025, at least meeting a company match if available. If you don’t, you're leaving free money on the table. If you are 50 or older and can afford to take advantage of catch-up contributions, you can save an additional $7,500 in 2025. New in 2025 are super-catch-up contributions for workers between 60 and 63. It lets you save a maximum of $11,250 instead of $7,500. If you are saving as much as you can and still feel like you’ll face a shortfall, delaying retirement by a couple of years can help you save more and mitigate that fear.
If you are already in retirement and feeling like you don’t have enough saved, Krueger says to take a hard look at your current expenses and spending habits and adjust accordingly, considering the impact inflation will have on your savings. After all, it wasn’t too long ago that inflation hit a more than 40-year high. “It could mean getting a part-time job or it might mean selling your house. The earlier you know (how much you need to save), the better a position you are in to fix it,” says Krueger.
2. You worried about your health
Health care is expensive, more so as we age. According to Fidelity Investments, a 65-year-old retiring today will need about $165,000 to cover healthcare expenses. That figure doesn’t even consider any unexpected illnesses or accidents, nor does it account for a stint in a long-term care facility, which can set you back tens of thousands of dollars depending on how long you need care. If you haven't been that healthy in 2024, it's understandable that concerns about your health keep you up. Even if you haven't been unwell, the thought of getting sick when you retire and not having the cash to cover it can be downright scary.
The solution: If you aren’t in retirement yet and have a high deductible health insurance plan, Dan Sudit, founding partner at Crewe Advisors, the Scottsdale, Arizona independent advisory firm, says to take advantage of a health savings account. This is a tax advantage way to save money for those unexpected health events. The great thing about an HSA is you can roll it over each year, essentially hoarding money that can be used for qualified medical expenses when you do exit the workforce. “A lot of clients have the ability to set money aside in an HSA plan and don't use it until retirement,” says Sudit.
Another way to slay this fear is to play out different what-if scenarios and see if your current retirement savings rate will be enough to cover it, considering your family’s medical history and potential longevity. It's also a good idea to check your current health insurance, whether you are in or out of retirement, to ensure it gives you the coverage you need now and into the future. “The way to put the fear to rest is don’t let questions go unanswered,” says Krueger.
3. You lack a sense of purpose
For people entering retirement now or in the future, a lack of purpose could be what nightmares are made of. That’s particularly true if you love your job, your self-worth is attached to it or the thought of idle time freaks you out. It's made worse if you were forced into retirement and now have to figure out ways to spend your time.
The solution: Just like you plan how much you have to save for retirement, you need to envision what you’ll do when you finally get that freedom. “Getting rid of the freedom without purpose fear all starts with thinking about what you really care about and why you wanted to retire in the first place,” says Krueger. “If you just wanted to stop the 9-to-5 grind, you have to substitute that with something else.” That something else can be completely different things that keep you from being bored in retirement. For some, it could be volunteering or taking free college classes. Others might want to get a part-time job. “Retirement is all about blending money and health and wellbeing and purpose,” says Krueger. As you search for your purpose, Sudit says to be open-minded and test-drive different things to identify what gives you personal satisfaction. It doesn’t have to be a life-altering activity; it just has to be impactful to you.
4. You have not given your legacy a thought
If you’ve amassed a small fortune, own a small business or have other assets and haven’t planned for how they will be passed down, it's understandable that you’re losing sleep. You don’t want your loved ones fighting over your assets when you’re gone. Unfortunately, many of us don’t give our legacy too much thought until we are in the later stages of retirement, and if we wait too long, it can be too late.
The solution: Talk with your adult children or loved family members about estate planning — how you want your money and assets divided up. It may be an uncomfortable conversation, but one you shouldn’t avoid. If you don’t want to do it face-to-face, Williams suggests writing a family love letter that states your values and what you want your loved ones to use the money for. If your legacy is complicated or has a lot of moving parts, consider the help of a financial adviser who can come up with an inheritance plan that matches your vision. “A big thing people need to think about is what is important to them may not be important to that next generation,” says Sudit. “So often people who have a family compound or lake house want to make sure the kids or grandkids can enjoy it, but in reality, it ends up being less of an asset and more of a burden.” That's just one example of the worst assets to leave your kids or grandkids.
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