Americans Hesitant to Retire: An Examination of the Fears Preventing Retirement for Many U.S. Citizens
Americans are reevaluating their retirement plans due to a combination of factors, including inflation concerns, inadequate Social Security benefits, and worries about outliving their savings.
Inflation concerns are causing a rise in living costs, making existing retirement savings insufficient for a comfortable retirement. Despite market volatility in early 2025 leading to slightly lower average retirement balances, Americans have maintained or even increased their 401(k) savings rates to record highs, reflecting attempts to catch up for anticipated higher expenses.
Social Security benefit uncertainty also looms large. With the aging U.S. population and rising life expectancy, there is anxiety around the long-term viability and potential reductions in Social Security benefits. The Social Security Administration projects a growing dependency ratio as more retirees outnumber working-age adults, which may strain the system. Many baby boomers worry more about outliving their savings than dying, and may delay retirement to maximize their benefits or due to fear that benefits will be reduced in the future.
Concerns about outliving savings are widespread. The "magic number" retirees aim for to feel financially secure is roughly $1.26 million, yet median savings for people approaching retirement age remain far lower—for example, median savings for those 55-64 is about $185,000 and for 65-74 about $200,000, highlighting a significant shortfall. As longevity increases (many expect to live into their 90s), the risk of exhausting retirement funds grows, prompting many to continue working longer or retire earlier than planned but with financial insecurity.
Additional reasons pushing Americans to reconsider retirement include health issues and job loss forcing earlier-than-intended retirement, underscoring the fragile financial readiness of many retirees.
In response, financial advisers have changed their retirement planning approach over the past year to address client worries about market volatility, inflation, and rising interest rates. Over half of advisers are putting more client investments into annuities to provide protection and confidence.
However, only one in four people work with a financial adviser, with cost being one of the biggest barriers. Those without a source of protected income (pension or annuity) are twice as likely to delay retirement than those with one. More people should seek help from a financial adviser to gain confidence in their retirement plans.
Congress needs to focus on shoring up Social Security to prevent it from going broke sooner than expected. With the United States hitting "Peak 65," with more people turning 65 each day than at any time in history, the need for a secure and sustainable retirement system is more pressing than ever.
References:
[1] "Americans Maintain or Increase 401(k) Savings Rates Amid Market Volatility." Forbes, 12 Mar. 2025.
[2] "Retirement Insecurity: Why Americans Aren't Ready for Retirement." AARP, 15 Apr. 2023.
[3] "Social Security Benefits: What You Need to Know." Social Security Administration, 1 Jan. 2023.
[4] "Baby Boomers Delay Retirement Due to Fear of Outliving Savings." CNBC, 10 May 2023.
[5] "The Retirement Crisis: Why Americans Aren't Prepared." The New York Times, 15 Feb. 2023.
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- Americans are actively seeking ways to boost their personal-finance assets, like increasing 401(k) savings rates, as they grapple with concerns about inflation and outliving their savings during retirement.
- With Social Security benefits uncertain, many Americans are turning to financial advisers to help them manage their personal-finance affairs and invest in products like annuities, providing a sense of protection against market volatility and preserving resources for a comfortable retirement.
