Top Retirement Fears -- and the Straightforward Fixes for Each

Source The Motley Fool

Key Points

  • Keep a healthcare fund separate from regular retirement savings.

  • Include inflation-protected assets and income sources in your portfolio.

  • Build a realistic retirement budget and review it regularly.

  • The $23,760 Social Security bonus most retirees completely overlook ›

Given the state of the economy and geopolitical events beyond their control, it's no surprise that more Americans report feeling anxious about retirement. Among their top fears are healthcare costs and outliving their retirement savings.

The first step toward battling retirement anxiety is to create a plan you can live with. Here are some practical ideas for addressing fears you may have about your golden years.

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Illustration of Benjamin Franklin giving the side-eye to newspaper headlines saying things like "Crisis," "War," "Climate," and "Inflation."

Image source: Getty Images.

Healthcare concerns

A recent report from Fidelity Investments estimates that the average 65-year-old retiring in 2026 can expect to spend $185,500 on healthcare expenses throughout retirement. Granted, this total includes many expenses you pay for a little at a time, such as Medicare premiums, deductibles, copays, coinsurance, and excluded services, such as vision and hearing. Still, it's important to plan for all medical costs. Here are some ideas for doing that.

Build a dedicated healthcare budget

Build a separate account dedicated solely to medical expenses. Not everyone will spend as much as the Fidelity estimate suggests, but if you do, you'll know the money is there.

Maximize tax-advantaged accounts

If you currently have a high-deductible health plan, you are likely to have access to a Health Savings Account (HSA). To maximize an HSA's unique tax benefits, consider contributing the maximum possible annually and rolling it over from year to year, all the way into retirement.

Choose carefully

When choosing Medicare and supplemental coverage, review each plan and add-on carefully. Out-of-pocket expenses change annually, and your health needs may change, too. Take the time during open enrollment (Oct. 15 through Dec. 7) to compare plans until you're sure you've found the coverage you need at a cost you can afford.

Spend with a plan

Another major concern for retirees is running out of money. If that's true for you, these tips may help you feel more secure.

Be conservative

Stick with a conservative annual withdrawal rate, such as the 4% Rule. Build a cash account large enough to cover one to three years of withdrawals from your retirement account. That way, you won't have to draw from your retirement account during market downturns and can avoid selling assets when prices are low.

Diversify

Whether you're planning for retirement or already retired, diversify investments across stocks, bonds, and income-producing assets. That way, growth can keep up with inflation while safer holdings support near-term withdrawals.

Delay Social Security

Let's say that your full retirement age (FRA) is 67, but you delay claiming until 70. Right away, your monthly benefits will be roughly 24% higher. For example, if you're due a monthly Social Security benefit of $2,500 at age 67, waiting until 70 boosts it to $3,100.

Look into lifetime-income products

Immediate or deferred annuities can turn part of your savings into guaranteed monthly income that you can't outlive.

Note: Life insurance companies primarily offer annuities, which are distributed through broker-dealers, banks, or online platforms. Annuities can be complex and expensive, so the safest person to talk to about them is an independent, fee-only fiduciary financial advisor who does not earn a commission from selling annuities or other products.

While there may be no way to entirely rid yourself of retirement anxiety, you can plan for the challenges you fear most.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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