Biggest fear of retirement: Outliving my money

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The biggest retirement fear in Transamerica’s 2021 Retirement Survey is “outliving my savings and my investments.”

From the youngest to the oldest working Americans – from Gen Z to Baby Boomers – their biggest fear about retirement is “outliving my savings and my investments.” outweighs concerns about physical or mental decline.1Those closer to retirement, who probably face the full cost of a long period away from work, were more concerned about the depletion of their nest egg than younger workers. Almost half of GenX generations (41-56 years old) and baby boomers – 46% – cited it as their biggest fear.

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For young workers, the lack of confidence in social security as a safety net has helped fuel their fear of becoming destitute in retirement. 70% of GenZs and 77% of Millennials agreed that “when I’m ready to retire, Social Security won’t be there for me”.

(Big numbers linked: Many GenXers agree: It’ll take a miracle to have a secure retirement, Americans seek advice amid financial stress from Social Security)

A lack of investment knowledge can also be part of what makes the future scary. 62% of those surveyed said they had little or no understanding of asset allocation principles when it comes to investing for retirement.

The fear of outliving your money is a concern that resonates at Horizon Investments, a goal-oriented investment manager who creates strategies to address the needs and risks people face during the stages of accumulation, development. preservation and distribution of an investment route.

(Read Horizon’s Redefining Risk to understand our goal-based investment philosophy)

Horizon has long identified the primary risk for retirees as longevity, given the double pressure of people living longer and healthier, and the low returns currently found in fixed income markets.

Unfortunately, the traditional financial advice of increasing exposure to bonds as someone ages may no longer be sufficient if the goal is to produce a financially secure retirement.

(Related Large Number: Are Descent Path Strategies Still a Good Option for Retirement?)

Horizon Investments believes that inflation-adjusted fixed income returns are likely to be meager in the years ahead. The starting level of fixed income returns has always been a good predictor of future returns. After 40 years of declining yields, there is much less room for continued decline. Simply put, today’s low yields are likely to limit potential future yields from bonds. And even if the Federal Reserve decides to hike rates in 2022 or 2023, we believe those who invest too heavily in fixed income may find it difficult to generate interest income if rates remain at historically low levels. .

Big Number Reports and Related Research Papers:

Horizon Investments’ Real Spend® Retirement Income Strategy was designed to combat the fear of running out of money. It combines an expense reserve, a growth portfolio and our Risk Assist® algorithm.

Actual expenditure® is designed to carry greater exposure to equities than is typically found in traditional retirement strategies with the goal of replenishing or growing a client’s assets over time.

Actual expenditure® Equity allocation decisions, coupled with tactical risk mitigation, are designed with the goal of limiting a retiree’s investment risk to meet short and long term financial needs.

See our actual expenses® Strategy and download our Distribute Stage brochure for more details on how advisors can help their clients meet common retirement income challenges.

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Originally posted by Horizon Investments


1Transamerica Retirement Survey, https://transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2021_sr_four-generations-living-in-a-pandemic.pdf

This commentary is written by the asset management team at Horizon Investments. For additional commentary and media interviews, contact Chief Investment Officer Scott Ladner at 704-919-3602 or sladner@horizoninvestments.com.

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The real expense® retirement income strategy IS NOT A GUARANTEE against market losses and there is no guarantee that actual spending® The strategy chosen by an investor will lead to successful investment results for part or all of an investor’s retirement. This strategy is not an insurance product with guaranteed payments. This is a strategy that invests in marketable securities, the value of which will fluctuate. Before investing, consider the investment objectives, risks, fees and expenses of the strategy. Keep in mind that investing comes with risk. The value of an investment will fluctuate over time and cause money to be made or lost.

RiskAssist® IS NOT A GUARANTEE against loss or decline in the value of a portfolio; it is an investment strategy that complements a more traditional strategy by periodically changing the exposure to fixed income securities based on Horizon’s view of market conditions. While Risk Assist was designed with the goal of limiting drawdown, Horizon is unable to predict all market conditions and guarantee that Risk Assist will always limit drawdown as intended.

Accounts with Risk Assist® are not fully protected against loss. In addition, when Risk Assist® is deployed (whether partially or fully) to mitigate the risk of an account, the account will not be fully invested in its original strategy and, therefore, during periods of strong market growth, the account may under -perform accounts that do not have the Risk Assist® function. Customers can lose money.

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