Americans may be entering retirement in complete uncertainty. The fear of running out of money, coupled with aversion to bad news, is causing many workers to retire without knowing how much they'll need. Zero planning can not only force people to work longer but also leave them unprepared for early retirement due to health issues, caregiving responsibilities, or layoffs. Early action, conservative calculations, and living within one's means are key to mitigating retirement risks.

Key data: 42% has never been calculated, and even those nearing retirement are avoiding the topic.

A new report from a financial planning platform reveals that a total of 42% of Americans have never calculated how much money they need for retirement. Even those closer to retirement are avoiding the topic: the report states that one-third of those expecting to retire within the next 15 years have consistently avoided calculating their retirement savings needs. Joseph Spada, a private wealth advisor at Summit Financial in Parsipane, New Jersey, said, “People are busy and don’t want to hear bad news. They don’t want to know if they have a funding gap, they don’t want to hear things like they shouldn’t have bought a new car. It’s human nature.”

Fear and Gap: More afraid of running out of money than of dying, median savings are only $955

However, data from Allianz's Future Retirement Research Center shows that 67% of Americans fear running out of money more than they fear death. In this context, figuring out how much money you need for retirement early on is crucial. Many Americans are not adequately prepared for retirement. Data from the National Institute on Retirement Security shows that the median retirement savings for workers is only $955. Data from asset management firm Schroders shows that Americans believe a comfortable retirement requires $1.2 million; $955 is a drop in the ocean. "The most common worry is running out of money. But without planning, there's a risk of not having enough. Planning can alleviate the fear of uncertainty. The longer you don't plan, the greater the risk of running out of money," says Christopher Walsh, Senior Financial Advisor and Regional Market Director for Arizona at Capital Choice in Phoenix.

The Cost of Procrastination: Working Longer, Forced Early Retirement, and Lifestyle Impact

If you're unsure how much money you'll need for retirement, you might have to work longer than you want, and retirement could become an unaffordable dream. But having to work until the end of your life can be risky. Not everyone can choose when to retire, as poor health, caregiving responsibilities, or layoffs can force some to retire earlier than expected. Data from the Employee Benefit Institute shows that most retirees—three-fifths—say they will retire before age 65, with a median retirement age of 62. The institute also found that nearly half of retirees said they retired earlier than originally planned. Not knowing how much money you'll need for retirement can also put you at risk of a severely disrupted lifestyle. If you don't actually have enough money in retirement, you may have to drastically cut back on retirement spending, especially given today's longer lifespans and the possibility that retirement can last for decades. Withdrawing too much money too early can turn the fear of running out of money into reality. “If you find yourself behind at 45, you still have time to adjust your savings, investments, or retirement expectations. But if you find yourself behind at 65, you have far fewer options,” says Jon Ulin, founder and managing director of Ulin & Co. Wealth Management in Boca Raton, Florida. “Not knowing your total retirement savings goal is like driving blindfolded when making one of the most important financial decisions of your life,” Ulin says.

Where to begin: First, list income and expenses, then distinguish between necessary and non-essential expenditures.

First, list all your expenses and income. Spada says, “Figure out exactly how much you’re spending—you always spend more than you think, and distinguish between necessary and unnecessary expenses. See what you can eliminate and what you must keep.” Some expenses may disappear after retirement, such as mortgage payments, college tuition, and other child-rearing costs. Others may increase, such as healthcare expenses. Fidelity Investments data shows that a 65-year-old retiring in 2026 is expected to spend an average of $185,500 on healthcare and medical care throughout their retirement. This estimate does not include long-term care costs. While working with a financial advisor might give you a more detailed understanding of your retirement financial needs, there are several online retirement calculators that may be sufficient to calculate your needs if the user's data is accurate. There are also some rules of thumb for retirement: one is to estimate that you need 80% of your pre-retirement annual income after retirement; another is the “4% rule,” which suggests setting aside 4% in the first year of retirement and adjusting thereafter according to inflation. However, these are just suggestions; some people spend more, some spend less, and these guidelines are bound to change. Aaron Gaines, founder and president of Gaines Capital Management in Smyrna, Georgia, says that aspects often overlooked include inflation, healthcare spending, taxes, and market downturns.

Calculation method: multiply the gap by 25, and conservatively plan to cope with uncertainty.

Gaines says that once you estimate your annual retirement expenses, subtract guaranteed income such as Social Security benefits and retirement pensions, and then multiply the remaining shortfall by 25. For example, if you need to generate $40,000 annually from investments, your initial goal would be $1 million. Gaines says, “One of the biggest mistakes Americans make is moving into retirement without knowing how much it will actually cost. Your retirement savings figure isn’t just about how much you’ve saved; it’s about how much income your savings need to generate over the rest of your life.” Gaines points out, “The goal isn’t necessarily to retire with the most money, but to retire knowing you won’t run out of money in your lifetime.” Even Social Security benefits aren’t guaranteed. The Congressional Budget Office says that unless Congress takes action to strengthen the Social Security system, benefits could be cut by 26% by 2032. There are proposals to reform the program, such as raising the age for receiving full retirement benefits, which could potentially change benefit levels. Robert Percychett, founder of Delagify Financial in Avada, Colorado, and a financial planner, says to be conservative when planning. He said, "Regardless of your financial or tax planning, living within your means is the most crucial skill for a secure retirement—don't be overconfident."

Action Recommendation: The earlier the calculation, the better; now is the starting point.

A crucial first step is to take action—and the sooner the better. “If you run your own retirement projection model now and it turns out to be bad news,” Spada says. “By age 60, there’s not much you can do to fix it.” Spada advises, “Build your own retirement projection model now, even if you’re 15 years away from retirement. A lot can go wrong in those 15 years, but at least it’s a starting point.”

Summarize

A financial planning platform report shows that 42% of Americans have never calculated their retirement savings, and it is estimated that one-third of retirees will avoid doing so within the next 15 years. Allianz data shows that 67% of Americans fear running out of money more than they fear dying, but the median retirement savings is only $955, far below the $1.2 million needed for a comfortable retirement. Zero planning may lead to working longer, being forced to retire early, or drastically cutting back on spending after retirement. Financial advisors recommend first listing income and expenses, distinguishing between necessary and unnecessary expenditures, multiplying the shortfall by 25 to estimate goals, and maintaining conservative assumptions about inflation, healthcare, taxes, and market downturns. Social Security benefits are at risk of being cut by 26% by 2032; living within one's means is crucial. The earlier the better; even with 15 years until retirement, now is the starting point.