For almost two-thirds (64 percent) of Americans, running out of money in retirement is a bigger fear than dying, according to the 2025 Annual Retirement Study from Allianz Life Insurance. Running out of money is such a constant fear in my industry (financial planning and money management for households approaching and in retirement) that one of the most discussed services at my company, Berkshire Money Management, is our Paycheck Replacement Plan. It makes sense—the mystery of shifting from a familiar stream of income to something new, namely creating a stream of income from a lump sum of cash or investment portfolio, can be a source of great anxiety for people nearing retirement.
The fear of change is not unique to investments or retirement, especially as we age. There have been numerous studies on this phenomenon, such as the 2008 “Age Differences in the Big Five Across the Life Span” study, which tracked more than 35,000 adults. This study concluded that openness to new experiences shows a clear, roughly linear drop from the 20s through the 70s, even when controlling for education and gender. In 2021, Laura Carstensen and Hal Hershfield found in their “Socioemotional Selective Theory“ review that as time horizons shrink, we reject exploration and novelty and seek familiarity (often conflating “familiar” with “predictable”).
We see these fears in everyday life. Our interest in music discovery peaks at age 24 and a half, and our interest in unfamiliar music falls rapidly after 30. First-time tattoos or piercings after 40 are not common. Relatively few people begin smoking cigarettes after age 25. And if you have never had sushi by age 35, you probably never will.
Perceived opportunity windows like these shut after a point. So, yeah, when you retire, it can be terrifying to switch from a method of income you have known for decades to something so unfamiliar—namely, generating income from an investment portfolio.
Knowing the human brain, one can understand why running out of money is a fear greater than death. Factors contributing to the fear of running out of money include high inflation (54 percent), the reduction or loss of Social Security (43 percent), and high taxes (43 percent). (You can put me in the “high taxes” camp!) Generation X, now in their 40s and 50s, worry more about running out of money (70 percent) than Baby Boomers (61 percent), whose ages range from 61 to 79. Understanding how your income will change during retirement through a personalized Paycheck Replacement Plan, or some other process, can help alleviate those fears.
A well-planned retirement can help you maintain and grow your investments. However, only 23 percent of Americans have addressed their fears with a financial professional, down from 24 percent in 2024. This is OK, as long as you have a plan. Without the aid of a professional, survey respondents said that the top three ways to address their fears are:
- Increasing retirement savings (44 percent);
- Reducing current spending to save more (41 percent); and
- Working longer to retire later (39 percent).
Many near-retirees, as well as professional advisors, would applaud increasing retirement savings; however, fewer would find it appealing to reduce their spending or work longer. The good news is that it is not all about time and returns—households can make plans to reduce debt, strategically select the most opportune time to collect Social Security, choose the appropriate Medicare plan to avoid overpaying, allocate investments to the most tax-efficient accounts to reduce your tax burden, and (perhaps counterintuitively) pay some taxes now so that you do not have to pay as much (if any) later (e.g., contributions to certain retirement accounts or Roth IRA conversions).
But even if you do not make a plan (and follow those tactics), quite frankly, your fears may be overblown anyway. A popular rule of thumb is that an investor could withdraw four percent from their portfolio per year without violating the initial capital. Four percent is a conservative number, but without the benefit of proper planning, it is better to be conservative. According to the Nerd’s Eye View, “by applying the 4 percent rule, over two-thirds of the time the retiree finishes with more than double their wealth at the beginning of retirement, over a lifetime of spending {the four percent annually}.”
That said, the fear of running out of money is real and understandable. (It is so real, I wrote a whole book about it!) However, with personalized investment strategies and ongoing financial and tax planning, you should be able to do better than the survey respondents who intend to spend less and work longer. Not that there is necessarily anything wrong with those two choices, but I hope you will choose your path based on what you want to do, not the fear of running out of money in retirement.
Allen Harris is an owner of Berkshire Money Management in Great Barrington and Dalton, managing more than $700 million of investments. Unless specifically identified as original research or data gathering, some or all of the data cited is attributable to third-party sources. Unless stated otherwise, any mention of specific securities or investments is for illustrative purposes only. Advisor’s clients may or may not hold the securities discussed in their portfolios. Advisor makes no representations that any of the securities discussed have been or will be profitable. Full disclosures here. Direct inquiries to Allen at AHarris@BerkshireMM.com.
