Overcoming Your 5 Biggest Retirement Challenges | Morgan Stanley (2024)

FAQs

What is the biggest challenge in retirement? ›

Retirees grapple with longevity, market fluctuations, inflation, taxes, and legacy desires, all affecting retirement savings adequacy. Manage retirement income with the 4% rule, variable annuities for assured income, and long-term care insurance for potential healthcare costs.

Reorientation: Often considered the hardest stage, this is when you're most likely to start re-evaluating your retirement lifestyle.

1. Saving Enough Money: Perhaps the top retirement concern is the idea that without steady employment, it might be difficult to have enough resources to maintain your preferred lifestyle. The cost of living can be high, and Social Security benefits may not be enough to cover all your living expenses.

There's a Plan for You

Our Financial Advisors can help you understand your options. Provide risk management resources, fee and service benchmarking, investment due diligence and participant education. Deliver tax-efficient, turnkey workplace retirement plans tailored to the needs of your business.

1) Not Changing Lifestyle After Retirement

Among the biggest mistakes retirees make is not adjusting their expenses to their new budget in retirement.

In some cases, it can decline for months or even years. As a result, some retirees like to use a 3 percent rule instead to reduce their risk further. A 3 percent withdrawal rate works better with larger portfolios. For instance, using the above numbers, a 3 percent rule would mean withdrawing just $22,500 per year.

1. Not saving enough. One of retirees' biggest regrets is not setting enough money aside for their retirement. A recent survey showed that 59% of retirees say they regret not saving more, and 60% say they should have started saving earlier.

What is the average age of retirement in the United States? Right now, the average age for men to retire is 65 while the average age for women to retire is 63. While many people say they will work for as long as they can, others retire earlier than expected.

For Social Security purposes, full or normal retirement age typically means age 66 or 67, depending on when you were born. Early retirement for you could mean retiring at 62 but it could also mean retiring at 40 if you're interested in the FIRE movement.

As of June, there were roughly 497,000 so-called retirement-created millionaires in the U.S., according to the wealth management firm, which analyzed balances across 26,000 of its customers' accounts. Nearly 399,000 Americans also have a least $1 million in an individual retirement account.

What was the worst year to retire? ›

As Pfau notes, the period in the late 1960s and early 1970s was a tough time to retire. Inflation ran rampant, and the S&P 500 scored several significantly negative years in that period. Returns were particularly poor in 1966, 1969, 1973 and 1974.

There are estimated to be a little over 8 million households in the US with a net worth of $3 million or more.

A 401(k) plan is one of the best ways to save for retirement, and if you can get bonus “match” money from your employer, you can save even more quickly. A 401(k) plan is one of the best ways to save for retirement, and if you can get bonus “match” money from your employer, you can save even more quickly.

Civil Service. At the top of the list is the Civil Service, where the Government will contribute between 26pc and 30pc of its staff salary into a “defined benefit” pension scheme. These types of pensions are highly sought after, as they guarantee an income in retirement that often comes with an inflation link.

Here's what this tells us: The biggest retirement challenge that no one talks about, in my experience, is finding purpose. Sure, money is certainly a concern. “I have a fear of poverty and losing dignity,” one person said.

Along with getting a late start on saving, some retirees also ignored other planning activities. Many are realizing that mistake now, with the Schroders survey finding 63% of retirees wish they had done more planning before retirement.