Americans Lack Plans for Retirement Income [New Study]

Allianz Life’s 2024 Annual Retirement Study is out, and it shows a whole lot of Americans lack plans for retirement income.

In fact, more than half of Americans do not have a plan in place for retirement.¹

If that isn’t troubling enough, in a report entitled Americans Face Alarming Retirement Savings Shortfall, the National Institute for Retirement Security found , “Most Americans will not have enough money for a financially secure retirement. […] NIRS research found that for Generation X, a generation that is quickly approaching retirement and the first that will retire largely without pensions, the bottom half of earners have only a few thousand dollars saved for retirement. This means the vast majority of Gen Xers are not even close to having enough savings to retire. And when Americans don’t have adequate retirement income, they are more likely to fall into poverty or turn to public assistance programs or families to make ends meet.”²

Retirement income is not something that will just fall into place. You cannot wing it.

A safe and secure retirement requires plans for retirement income.

56% of Americans Do Not Have a Plan for Retirement

plans for retirement income

According to Allianz Life’s 2024 Annual Retirement Study, “Less than half of Americans (44%) say they currently have a plan for how they will take income in retirement. Boomers (67%) are more likely than Gen Xers (30%) or millennials (33%) to say they have a retirement income plan.”³

While it is good that older Americans have more plans in place than their younger counterparts, those Gen Xers are quickly approaching retirement age themselves.

Without plans for retirement income, they may find themselves in the same spot as many elderly Americans are today – relying on family members to take care of them or having to forego essential needs.

Kelly LaVigne, VP of consumer insights at Allianz Life, explains, “If you don’t know how you will draw from your retirement assets for income, then you aren’t ready to retire. […] So much of retirement preparation focuses on accumulating assets – and that’s important – but it is critical to understand how those assets will be able to fund your life after you retire. To do that, you need to make important decisions like when to start claiming Social Security and examine what resources you have to fund your retirement.”⁴

48% Worry They Will Have to Live Frugally

plans for retirement income

According to the study, “Nearly half (48%) worry about living too frugally and not enjoying retirement as much as they should.”⁵

LaVigne adds, “Without a solid strategy, the ongoing process of deciding how much money to withdraw from which account when can be daunting.”⁶

Without solid plans for retirement income, you’ll be forced to make decisions on the go.

With so many factors determining costs, this can be especially tricky.

For instance, rising costs have led to “about one in four adults 65 and older and three in 10 aged 50-64 cut back on food, utilities, clothing or medication due to healthcare costs.”⁷

Older Americans are finding themselves having to sacrifice basic needs to cover healthcare costs.

Given this is the case, it is understandable why almost half of those in this study worried they will have to live frugally during retirement and won’t be able to enjoy it.

The way around this fear is to make plans for retirement income before the time comes.

45% Worry about How to Take Distributions to Cover the Cost of Retirement

plans for retirement income

Given the rising cost of retirement, the study also found that many Americans are concerned about how to responsibly take distributions.

According to Allianz Life’s 2024 Annual Retirement Study:

Americans identified the greatest risks to their retirement income:

Everyday costs increasing (42%)
Outliving money (35%)
Healthcare costs (32%)
Stock market dropping (31%)
Spending too much and running out of money (30%).⁸

This is why it is so important to make plans for retirement income.

You need to have a plan for how you draw from your assets and where you will find additional income.

Get a Plan in Place for Retirement

plans for retirement income

You don’t want to be like most of those who participated in this study.

You want a plan for your retirement.

Fortunately, there is still time to make plans for retirement income and get the ball rolling.

Do Not Raid Your 401(k): Make a promise to yourself to keep your money where it is and allow it to grow until the time comes. Raiding your retirement accounts may cost you in the future. It can impact the quality of your retirement, have negative tax consequences, and cost you money and opportunity.
Figure Out How to Contribute More Now: With years to go before retirement, make the most of your contributions. Continue to contribute enough to receive the company match. And then contribute some more! Every extra bit helps.
Consider Your Individual Retirement Needs and Wants: Take time to think about the retirement you need and want – and then consider if it is possible. While you may daydream about living at the beach and golfing daily, this may not be realistic. Instead, start with your true retirement needs. Calculate how much you need to make this happen.
Set a Timeline: It’s important to think about when you want to retire. For example, it is smart to know when you want to start claiming Social Security – especially considering the longer you work, the more you may draw from Social Security. Likewise, the longer you wait to withdraw from your 401(k), the more time it has to grow. Use this timeline to boost your retirement savings.
Think about Different Ways to Fund Retirement: Once you have an idea of when and how you want to retire, think about different ways to fund your retirement. Calculate how much you expect to receive from Social Security. Then, figure out how much more you’ll need to retire safely. What can you do to cover this gap? How much do you already have saved? Is it possible to utilize catch-up contributions? Do you have any other assets or investment opportunities? Are you open to working part-time during retirement?
Seek Professional Help: Creating plans for retirement income isn’t easy. It is beneficial to seek help from a professional who can help you come up with a strategy to utilize retirement funds in a way that lasts the rest of your lifetime.