Too Scared To Retire?

| March 30, 2023

Plan for Retirement and Overcome Retirement Fears

Retirement is a scary concept at its heart. It’s tough to imagine giving up work that you may have enjoyed and which may have defined your identity for thirty-plus years. Switching from saving money to withdrawing it is frightening, as well. Beyond giving up work and a paycheck, there are several more common fears (often wielded as scare tactics in the media), that keep people too scared to retire, even when they can do so safely. Yes, you need a plan to retire and you do need money. You can’t just retire on a whim. However, at some point you have to admit that the planning and saving part is done and working longer isn’t going to move the needle much, if at all, on what sort of retirement you will have. 

There are an awful lot of people out there who keep working long past the point where they could quit. Why? Because they’re scared. Some of that fear is natural, and some of it is created/exacerbated by the media/financial industry that knows fear equals clicks, ad revenue, and consulting fees. Fear is healthy, to a point. It can give rise to great plans and back-up plans. But it can become unhealthy, too. When it paralyzes you and keeps you at your desk long past the time when you could have moved on, it’s time to figure out why. Is the fear really about money and retirement, or something else?  

Here are some common retirement fears that, while somewhat founded, can also turn unhealthy and paralyze you into staying at work far longer than necessary. 

You Need To Be A Billionaire

There is a fear that to retire with less than several million dollars is to court disaster. Now, this might be true. If you want a lavish retirement in a high cost of living area, it will cost you. But most of us are angling for a more average retirement. We plan to have a paid off home, travel a little but not constantly, and keep a generally average standard of living. If this is you, you can retire on much less than a few million. 

In the U.S., if you have social security, that will cover a portion of your expenses. A retirement on social security alone will indeed be very lean, but social security income does cut the amount you need to pull from savings to meet your expenses. Plenty of people live comfortable, modest retirements on a combination of social security and a modest amount of savings. A little part time job or side hustle can add to your income, as well.

Social Security Will End

It might. In politics, anything is possible. However, it isn’t likely to go away entirely. Both sides would face unending outrage if they just said, “Hey, all that money you paid in over the years is gone and you won’t get any of it. We literally stole it from you.” Yeah, that would not go down well. While social security benefits might be reduced, or the age to claim might rise, I just can’t see it going away entirely. So while you might want to figure in a smaller payment or a later claiming age, I don’t think you need to decide not to retire based on this fear alone. 

Healthcare/Long Term Care Will Ruin You

Again, it might. It is possible for a terrible illness or decades of long term care to wipe away your savings. However, there are ways to protect against this. Don’t go without insurance. Once you’re 65 you can get Medicare, but if you retire before then, make sure you get insurance, either through the open marketplace or Cobra. (I doubt that the marketplace goes away entirely. Again, politicians like to talk about revoking it, but at this point so many people rely on it that there would be mass outrage if it were disbanded.)

There is long term care insurance, as well. While the policies aren’t as good as they used to be, they can still provide some buffer against the worst case. Shop carefully, though, and understand exactly what you’re buying. You can also plan for your care by buying into a continuing care facility when you’re relatively young. These places take you in while you’re still healthy, but as you progress in needs, they move you to assisted living and then full nursing care without much or any increase in your monthly bill. Yes, the buy-in is steep, but it’s an option that takes some of the worst case off the table. 

Plus, you need to look at your overall risk. Are there family risks of certain diseases? If yes, then you may need a different plan. How long are you likely to live? While you can’t know everything with certainty, at some point you have to say that you’ve done all the reasonable planning and risk assessment you can and take the leap. Look at it this way: If you end up with something that ends up costing you millions of dollars, would working an extra five years and saving another $100,000 really have changed the outcome that much?

Some Sort Of Black Swan Event Will Ruin You

Total economic collapse, civil war, a deadly pandemic, zombies, whatever it may be will come out of the woodwork to ruin you. It might. But probably not. Or at least not in a form that takes absolutely everything away from you. And if it does? Well, in that sort of scenario everyone is going to be out of luck, so you’ll be in good company. You can save and save and work and work, but if something truly horrible happens, it’s all for naught. Sure, if you have a few million dollars, you’ll hang in a bit longer than some other people, but you’ll still be out of luck. It might be nicer to have retired and at least have some nice memories to look back on while the zombies pound on your door instead of letting them get you at your desk. Again: Ask yourself if working another five years and stashing more money will change the outcome in this scenario. If not, you might as well retire. 

You’ll Outlive Your Money

If you’ve planned appropriately, this is unlikely. Your expenses tend to be highest in the early years of retirement when you’re traveling and socializing more. As you age and get around less, expenses tend to drop. While medical expenses might rise, by that point you’re likely covered by Medicare and drawing social security. If you notice that your nest egg is dwindling faster than you’d like, you have the option of adjusting your expenses, or taking on some part time work while you’re still relatively young. That can pad your savings for the older years. If you have a paid off home to sell, that can go a long way toward covering expenses. A reverse mortgage might also be an option. When creating your retirement plan, factor in a realistic estimate of how long you are likely to live and then work your plan to meet that number. 

Your Brain Will Turn To Mush

Alzheimers is a real thing that we don’t fully understand, and it could come for you. We know that keeping your brain active seems to help stave it off, and we’ve all heard stories about the person who retired and got dementia within months. However, this isn’t a foregone outcome. The key is designing a retirement that keeps your brain active. If you retire and plonk in front of Netflix forever, then yes, your brain might give out on you. But if you keep active, engage socially, pursue challenging hobbies or a side hustle, and keep learning, you’ll likely do as well as if you’d kept working. Dementia might still come for you, but it probably would have come even if you’d kept working. 

You’ll Lose All Your Friends/Relationships

Some people fear that leaving work means leaving all their friends behind. Or, that their partner will no longer respect them or feel the same way about them if they aren’t working. The former problem is an easy fix. Long before you’re ready to retire, start making friends outside of work. Find a hobby group, or do some volunteer work. Use MeetUp to find like-minded people. Having friends beyond work makes the transition easier. 

If you have friends at work that you want to keep, you’ll likely have to work at the relationship. Offer to meet for lunch. Invite them to your get-togethers. All relationships require nurturing and once you leave work, keeping those friends is no different. 

If your partner is the problem, then it might be time for some counseling. Many couples get counseling to navigate major life changes, and there’s no shame in it. At the very least, you’ll need to stay attuned to the changes in both your lives and be flexible and willing to compromise so that you both stay happy. 

You Won’t Be Able To Do All You Want

You might not, but there’s a big difference between having to adjust your plans due to financial (or health) concerns and just sitting in a chair waiting to die. Make new plans that account for where you are at any given point. Latching on too tightly to rigid plans isn’t healthy. Neither is (excessively) mourning what you cannot do. Be flexible and realize that the world is full of opportunities and things to enjoy. Maybe you can’t own a boat, but you can rent one occasionally. Or you can’t travel to far-flung locales, but there are plenty of domestic places to enjoy. If your health doesn’t allow you to climb mountains, maybe you can just hike a lower trail. Adjust and compromise. That’s the key. 

People Will Judge You

This is a fear common to those who retire early, or from an impressive job. People will wonder why you gave everything up to do “nothing.” Some might openly criticize your choice. The key phrase in this situation is, “Who cares?” So what if people are saying you’re wasting your talent, or that you’ve become a leech on society? It isn’t their business. Are you happy? Did you make a plan to retire and execute that plan in a way that satisfies your needs? That’s all that matters. Just let the critics go. 

You’ll Die

Some people believe that they will die when they retire, as if retirement is some sort of signal to the Grim Reaper. It may be. I know of a few people who died within weeks or months of retiring. However, I don’t believe retirement itself had anything to do with it. Had they not retired, they likely would have died at their desk on that same day. It’s just the way the dominoes fell. The odds are good, though, that retirement won’t equal instant death. You’ll probably have quite a few years of fun and relaxation ahead. But, yes, you will die because, as they say, no one gets out of here alive. The question is: Do you want to die at home or out doing something fun, or at your desk?

Instead Of Fear, Try Hope

The bottom line here is that, yes, things might go wrong in your retirement. That’s the nature of life. Everything really is a gamble with unclear outcomes. However, just because things go wrong doesn’t mean that you are doomed. And it doesn’t mean that working another ten years would solve/prevent the problems, anyway. There are ways to plan and prepare for most of the worst case events. And for those that you cannot plan around, such as black swan events, you can take some solace in knowing that most people are just as unprepared as you are. 

You can also try switching your viewpoint from one of doom and pain to one of hope and opportunity. If you need to bring in money during retirement, for example, don’t fear having to go back to work. Instead, embrace the opportunity to make money doing something you always wanted to do. A creative side hustle, or a job doing something you find fun, perhaps? Or take a job that gives you discounts on materials or experiences you want to include in your retirement. If your health precludes you from doing certain activities, try other activities. The world is wide and there are lots of opportunities. Just because your primary plans don’t work out doesn’t mean that you must crawl in a hole and die. 

Does any of this uncertainty mean that you should never retire? That you should just work and pack your savings until your body gives out and you collapse at your desk? No. At some point you have to say, “I’ve planned, I’ve prepared, and I’ve done all I can reasonably do,” and take the leap. If you still can’t shake the fear, it might be time to consult a professional to see if there’s something else going on. You only get one chance at life and it would be a shame to miss out because you are too scared to retire. 

This post originally appeared at Barbara Friedberg Personal Finance.

Category: Personal Finance

About the Author ()

Barbara Friedberg, MBA, MS is a former investment portfolio manager, author of Personal Finance; An Encyclopedia of Modern Money Management and two other investment books. Friedberg is a former university Finance and Investments instructor, and publisher of Robo Advisor Pros and Barbara Friedberg Personal Her work has been featured in U.S. News & World Report, Yahoo! Finance, Investopedia, GoBankingRates, TheBalance and more. She offers a free finance and investment management tool. You will get top level money management tools for retirement planning, budgeting and investment management.

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