I’m a Retirement Planner: 7 Biggest Fears of Middle-Class Retirees on Social Security
Written by
Angela Mae
Edited by
Rebekah Evans
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Millions of Americans rely on Social Security during retirement, but those in the middle class — anyone whose income is two thirds to double their area’s median income — worry that their paycheck isn’t going to be enough to keep up with rising costs.
Even with the latest cost-of-living-adjustment (COLA) set at 2.5% for Social Security benefits and SSI, according to the Social Security Administration (SSA), many retirees are concerned about their ability to pay for everyday expenses and cover healthcare costs. Some also worry that they won’t be able to leave behind a legacy for their families.
GOBankingRates spoke with two retirement planners, David Schlossberg and Gary Knode, about the top concerns middle-class retirees relying on Social Security face. Here’s what they shared.
Rising Medical Expenses
The rising cost of healthcare has always been a concern for American retirees, except perhaps for the highest-net-worth individuals. David Schlossberg, enrolled agent (EA), registered financial consultant (RFC), accredited investment fiduciary (AIF), national social security advisor (NSSA) and senior partner at Assured Concepts Group, shared that this is a major concern he’s seen as well.
“Even with Medicare, out-of-pocket expenses such as premiums, deductibles, copayments and long-term care can add up quickly, often exceeding what retirees anticipated,” he said. “Many clients worry about whether their Social Security benefits will be enough to cover these rising costs, especially as they age and their healthcare needs increase.”
Changing Healthcare Policy
In a similar vein, many middle-class retirees relying on Social Security for a good portion of their income worry about possible changes to existing healthcare policies — particularly as they might pertain to them.
According to Schlossberg, the unpredictability of healthcare policies can leave “retirees feeling uncertain about how to plan for potential gaps in coverage or unexpected expenses.”
Notably, there are ways to alleviate healthcare-related concerns. For those still actively employed, contributing to a Health Savings Account (HSA) is one such option. These plans have triple tax advantages — contributions are tax-deductible, the money grows on a tax-deferred basis and qualified spending is tax-free.
Outliving Savings
“By far, the number one fear retirees have for retirement is the fear of outliving their money,” said Gary Knode, certified financial fiduciary (CFF) and president at Safe Harbor Wealth. “They’ve worked hard for 20, 30, 40 years to save a nest egg for retirement and so it’s important to retirees that their savings can sustain them through their retirement years.”
As for why this fear has become so prevalent, Knode said, “Many factors such as inflation, market downturns and healthcare costs contribute to this concern. Any one of these risks could derail a retirement plan and cause a retiree’s savings to quickly evaporate into nothing.”
Inability To Handle Emergencies
Even the most-prepared individual with an exceptionally well-balanced investment portfolio can worry about emergencies. And for those in the middle class, sometimes there’s simply not enough money to cover the unexpected.
“Many retirees worry about their ability to handle unexpected financial shocks, such as home repairs or the need to financially assist family members,” Schlossberg said.
According to the U.S. Bureau of Labor Statistics, only about 37% of people ages 65 and up (as most retirees are) earn over $50,000 a year. While this does include middle-class households, an emergency that costs thousands of dollars can be a serious setback — and a major concern.
Longevity Risk
Similar to the fear of outliving one’s savings, is longevity risk — that is, living longer than expected — and all that comes with it.
“As medicine and technology advance, we are seeing much greater life expectancies,” Knode said. “Retirement is a much more extended period for Americans than it’s ever been. Because we are living longer, we have greater exposure to market risk, inflation risk, tax risk and healthcare risk during those retirement years.”
Inflation Eroding Purchasing Power
Inflation is a major concern for anyone living on a fixed income. As of October 2024, the annual inflation rate was 2.6%, according to Trading Economics, slightly higher than September’s 2.4%. While this is significantly lower than what it was during the pandemic, it’s still cause for worry.
According to Schlossberg, a lot of retirees worry about inflation, which erodes their purchasing power over time. This, of course, exacerbates other fears like the length of Social Security.
Social Security Program’s Sustainability
For those who haven’t yet retired or who have but still expect to live a long time, there’s another fear: the fear Social Security simply won’t be around long enough.
“We’ve seen reports of the danger that the Social Security trust fund will run out of money in the next decade or two. This would have a major impact on retirees,” Knode said. “Even if the Social Security Administration cut benefits by 25%, as they’ve warned they might do, it would make the lives of our retirees very difficult. This is why I stress the importance of additional retirement savings, in the event Social Security gets reduced.”
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