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Retirement: Too Worried or Not Worried Enough?

Mar 24, 2017 | 5 min read | by Marilen Cawad

Key Takeaways

  • Overworrying could feed your future—and starve your present.
  • Underworrying today could risk your financial tomorrow.
  • Be realistic about your preparedness, and act accordingly.


When it comes to retirement preparedness, two extreme examples come to mind: the “oversaver” and the “undersaver.” One is too worried about retirement, while the other is simply not worried enough. Which one are you?



Example 1: Too worried

You’ve done a good job saving on a consistent basis over the years and you take pride in increasing your nest egg. You have paid off your mortgage and have no outstanding debt. You consistently monitor the status of your retirement accounts, and when there is market turbulence, you take quick corrective action, such as cutting down on spending. The idea of starting to draw down on your assets frightens you, and you are constantly thinking that that those assets will be depleted during your retirement.

You are too worried, and you are not alone. According to a survey1 of the Center for Retirement Research (CRR) published in February 2017, approximately 24% of American households believe they are at risk of not being prepared for retirement when, in fact, their current savings and retirement posture suggest that they are well prepared. This means that about one-quarter of those preparing for retirement are at risk of being “oversavers” and living below their means.

That is not always a bad thing, but Robert Fishbein, a vice president and corporate counsel for Prudential, says it can be a problem when you are not living the lifestyle you want and can afford. A frequent speaker and author on retirement planning strategies, Fishbein explains, “You could be forgoing travel or other nice plans, or worse, not enjoying basic living comforts or appropriate medical care.” In this case, the “oversaver” may need help moving from an accumulation mindset to a prudent spending mode.


Example 2: Not worried enough

You think about retirement, but not regularly and methodically. To you, retirement is a distant concern, not a priority, or too frightening to truly consider. You forgo years of savings, thinking you can always invest more aggressively to catch up. You consider current spending needs – a new car, a bigger home, or new furniture – a greater priority. When you go online and check on your estimated retirement assets, you see how far behind you are from your accumulation goal, but take no action to change your savings behavior.

You are not worried enough, and you are not alone either. According to the same CRR survey, 19% of American households believe they are well prepared for retirement when, in fact, their current savings and retirement posture suggest that they are not.

“The person who is not worried about retirement ultimately loses the ability to control his future,” Fishbein notes. “By saving and planning into retirement properly, you can control when you stop working. By failing to do so, your only choice is to keep working or live poorly in retirement.” The problem with that is that the choice to continue working may not always be your decision. The retirement plan of “working until I die” is not an adequate substitute for accumulating a retirement nest egg and planning for your retirement years.

The plan of “working until I die” is not an adequate substitute for accumulating a retirement nest egg.


Striking a balance

From the CRR study, we know that 43% of American households do not assess their retirement preparedness accurately. They are either too worried and oversaving, or not worried enough and undersaving.

So, how can you get a better sense of your retirement preparedness?

Fishbein says it is highly likely that you are well-prepared for retirement if you do the following:

  1. You consistently prioritize savings throughout your career and work toward an asset accumulation goal.
  2. You consistently maintain a budget and avoid dipping into retirement savings.
  3. You consistently avoid debt, or pay off personal debt, such as student, credit card and car loans.
  4. You have a plan and execute on the plan to pay off your home mortgage by the time you retire.
  5. You plan for retirement with the assumption that you will delay the start of Social Security benefits to age 70.
  6. You have a heath care plan for retirement.
  7. You have a plan for how you will use your assets to generate a reliable retirement income stream, including some portion that is guaranteed for your lifetime.
  8. You review and adjust your retirement planning at least annually to ensure you are still on track to meet your goals.


What you can do next

Strike a balance between saving for tomorrow and living for today. Check your savings status—and be realistic about your chances of reaching your goal. You may find you’re in better shape than you’d thought (and can afford to splurge on yourself every now and then)—or that the sturdy financial ship you thought you’d built has holes you need to fill (while forgoing fleeting expenses that could undercut your future).


Marilen Cawad is the Director of Digital Content Strategy at Prudential. She previously worked as managing editor for audience development at TheStreet.com, and as news editor for Institutional Investor magazine.


1. The National Retirement Risk Index (NRRI) is published by the Center for Retirement Research (CRR) at Boston College. The latest CRR research analyzes how well households are self-assessing their retirement preparedness. Prudential is the exclusive sponsor of the National Retirement Risk Index.



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