Retirement should be the time when Americans should have maximum peace of mind, as they no longer must worry about the daily bubble of corporate life.
But the experience of many retirees has been far from the expectation.
About 25% of retirees say they have lost sleep worrying about their financial situation, while 27% say they spend at least one hour a day worrying about money, according to a survey by Schroders, an investment management firm.
Furthermore, this financial stress is causing a decline in overall physical and mental health. The survey showed that 36% of retirees share the concern that financial stress will affect their overall health, up three percentage points from 2024.
What is causing this financial stress, and what can retirees do about it?
Causes of financial stress
Inflation
Inflation is one cause. About 45% of those surveyed complain that their expenses in retirement are higher than what they planned for. Consequently, 62% don’t know how long their savings will last.
Relatedly, 92% of those surveyed are concerned that inflation will reduce the value of their assets, which will inevitably affect how long those assets can last.
Concerns about the possible inflationary effects of Trump’s tariffs have only worsened the situation.
Healthcare costs
Though it can be subsumed under inflation, rising healthcare costs deserve a special mention.
Retirees spend an average of 15% of their income on healthcare costs, and most of them are surprised when they learn that Medicare does not cover as much of their healthcare expenses as they had expected.
For 86% of respondents, the possibility of healthcare costs exceeding what they anticipated was a major cause of concern.
The Social Security system
The concern about dwindling Social Security reserves is another source of stress. About 52% of Americans expressed concern about the Social Security system, according to a Gallup survey.
Similarly, 59% of non-retirees fear that the system won’t be around when they retire, according to a survey by LendingTree.
Sufficiency of savings
Only 40% of retirees surveyed by Schroders believe they have enough saved for retirement. 33% are sure they have not, while another 27% are unsure.
It is no surprise, then, that about 71% of respondents expressed concerns about outliving their assets.
While inflation is one cause of this, higher life expectancy is another.
Market volatility
About 80% of those surveyed by Schroders worry about a major market downturn affecting the value of their assets.
For example, the S&P 500, Nasdaq Composite, and Russell 2000 have all been in correction territory (10% drop from a recent swing high) at one point or another in 2025.
Financial stress and health
High levels of anxiety about money can increase the risk of chronic illnesses like high blood pressure and heart disease, according to Everyday Health. On the mental side of things, they note that chronic financial stress can also result in clinical depression and anxiety disorders.
Similarly, 42% of US adults have experienced panic or anxiety attacks caused by the state of their finances, according to a survey by Bread Financial.
Given that retirees have frail health in general, financial stress can complicate things further, which means rising healthcare costs. Since concern about rising healthcare costs is one of the causes of financial stress, this can lead to a vicious cycle (rising healthcare costs – financial stress – rising healthcare costs). Thankfully, none of the causes of financial stress is intractable.
Solutions to financial stress
With proper financial planning, retirees can more confidently tackle these issues instead of worrying about them.
“The uncertainty that’s currently plaguing so many retirees is a poignant reminder of the value of proper planning, products, and personalized advice for a comfortable retirement,” said Deb Boyden, head of US Defined Contribution at Schroders.
Let’s see how this works by considering how financial planning can help with the stressors identified above:
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Inflation: Someone who has included a realistic cost-of-living adjustment to their retirement expenses can better manage the impacts of rising prices in retirement.
Also, those who have created inflation-resilient portfolios or added an emergency fund to their retirement plans will be in a better position.
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Rising healthcare costs: Those who have supplemented Medicare with Medicare Advantage or Medigap and have subscribed to a long-term care (LTC) insurance plan will be in a better position.
Similarly, those with a Health Savings Account (HSA) and/or a medical emergency fund will face less financial stress during retirement.
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Social Security uncertainty: Someone who has prepared for the possibility of lower Social Security benefits by investing more and waiting till the full retirement age before retiring will be in a better situation than someone without a plan.
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Sufficiency of savings: Those who have factored longer life expectancy into their retirement plans will be less likely to worry about insufficient savings.
They would have been more realistic about their retirement expenses and the nest egg required to meet them over their entire life.
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Market volatility: A sound retirement plan would incorporate portfolio diversification as a risk management strategy. This will help reduce the impacts of market downturns and ensure stability during retirement.
It could also involve constructing a bond ladder, purchasing an annuity, or retiring late to ensure a stable income even in market downturns.
Interestingly, Schroders noted that 64% of retired Americans are not working with a professional financial advisor, and 44% don’t have a plan for estimating retirement expenses, determining retirement income needed, or developing an investment strategy.
Yet, sound financial planning remains the primary antidote to financial stress.
If you have been bogged down by financial stress but don’t have a financial plan, this is the time to get a financial advisor who can offer personalized retirement planning based on your risk tolerance, time horizon, and retirement goals.
This doesn’t mean that only those without a financial plan are stressed. Even those with a plan can feel stressed. The solution is to speak to your financial advisor when new macroeconomic or microeconomic situations are causing you to worry about your money.
Proper financial planning can be the difference between financial health and financial stress. If the tumultuous times have you tossing and turning instead of sleeping soundly, I highly recommend finding a trusted advisor whose job is to put your mind at ease by taking the stress of managing money off your plate.
