5 Tips to Help Resolve 30% of Retirees’ Fear of Working in Retirement


Diligent saving, strategic planning, and investing are essential for funding many people’s dream retirement. Start planning today, with confidence.

Senior woman sitting on a bench outside.

Retirees are living longer and experiencing retirement in new ways. They’re traveling the world, learning new skills, and redefining what a retirement community is. But the era when people worked 50 years for the same employer and retired with a predictable pension is gone. Instead, funding a comfortable retirement often depends on diligent saving, strategic planning, and investing for the long term. Here are five steps to help you get to your ideal retirement with confidence.


Calculate your living expenses

With 10,000 baby boomers retiring daily, the drive for a vibrant retirement is becoming common. If you’re approaching this stage in the next five years, now is the time to review your expenses, savings, and income to ensure that you’re on track for success. Doing so can give you confidence for retiring, or for making the adjustments necessary to stay on track. If you don’t conduct a review, then you may risk not having enough income to cover expenses, which could mean lifestyle adjustments in the future. Here are some questions to consider as you develop your budget:

How much are my living costs?
Expenses can add up quickly in retirement. According to a 2022 update from Employee Benefit Research Institute (EBRI), half of retirees said they spend less than $2,000 each month, and about a third spends between $2,000 and $3,999. Sixteen percent spends between $4,000 and $6,999, and 3% spends more than $7,000 per month.1

To identify your future expenses, track current spending by listing every dollar that goes to your daily living needs, from transportation to food. If you don’t have the stamina for this kind of detail work, you can develop a broad estimate by totaling all income and determining how much is typically left at the end of each month. This difference is your average monthly spending need. And don’t fall for the conventional wisdom that spending in retirement will decline. While expenses may decrease for some retirees once they stop working, many will most likely  spend more because they have extra time for travel and leisure activities.

What are my health care costs?
Health care expenses are the second-highest financial priority among retirees. One investment that can help them prepare is a health savings account (HSA). It isn’t insurance, but it does provide a tax-advantaged savings account to which you, and potentially your employer, can make contributions over time. You can use these funds to pay for most medical expenses, including prescription drugs, dental care, and vision care.

Keep in mind: If you spend HSA funds on nonmedical expenses before age 65, it may be necessary to pay ordinary income tax on those funds, as well as a 20% penalty. After age 65, you can take money out without the penalty, but it could be considered taxable income. HSA contributions are exempt from federal income tax, but they’re not exempt from taxation in certain states.

What income will I have?
Income can come from a variety of sources, such as retirement accounts, pensions, part-time work, and Social Security benefits. Tally all of the income you expect to receive, determining which sources will keep pace with inflation and which will remain flat. If you have income that won’t adjust with a potential rise in inflation, special planning may be needed to ensure that you don’t suffer a diminished standard of living during retirement.


Establish income stability

If the first steps of a retirement readiness strategy are to calculate actual expenses and create a working budget, then the next step is to compile a list of income sources and where you’re directing the funds. Without a clear view of your income and spending, you could lose sight of the budget and find it more challenging to maintain your ideal lifestyle.

For 70% of retirees in 2022, Social Security benefits have been their primary source of income. The average monthly payout has been $1,550.20.4

When strategizing income stability, you should consider having diverse sources that can provide for the rest of your life. Work with a trusted financial professional to help identify your income needs. (Only 27% of retirees take this step.) The amount of income needed will vary from person to person, due to lifestyle choices, healthcare expenses, and other personal details driving their budget.


Increase your savings

Some pre-retirees appear to be more confident than others about retiring comfortably, with only a third saying in a recent EBRI survey that they feel very confident.2 Here’s a retirement reality check: According to the Protected Retirement Income and Planning Report by the Alliance for Lifetime Income and CANNEX, only 48% of workers believe their retirement savings and other sources of income will last through their lifetime.3 The report also says that a substantial number of workers may not be able to afford the retirement lifestyle they imagine, because 45% of nonretired workers ages 45 to 75 are saving less than 10% of their annual income.

Most pre-retirees have no idea how much money they’ll need in retirement. One study says that the average American should prepare for $738,400 in total expenses.5 For the affluent or high-net-worth retiree, the numbers can be staggering.

For many people, a qualified retirement plan such as company-sponsored 401(k) is an optimal vehicle for longer-term retirement savings. Maxing out contributions each year, along with any employer match, and consistent payments to an annuity or life insurance policy can help build tax-advantaged savings over many decades. At the same time, while putting savings into a retirement plan is an important step, for most people, their plan and Social Security simply won’t be enough.


Continue working

Many people think of retirement as when they’ll stop working, but for others, continuing to work is part of the strategy.

Nearly 30% of baby boomers have no funds set aside for retirement, so they plan to continue working longer—or not retire at all.⁶ For some, continuing to work is a preference—they love what they do. For others, it’s based on need—they haven’t yet saved enough. And for some, it’s based on fear—they simply don’t know if they have “enough.”

If you plan to continue working in retirement, here are some benefits it can bring:

    • Augment your income. Whether it’s for extra spending money or for daily expenses, continuing to work can help fill the gaps among your other income sources. Your financial goals will help determine the amount of money you’ll need and the amount of work you’ll need to do.
    • Explore new passions. For some people, retirement work means tapping into old or new passions. Feeding your interests through work can encourage personal growth, which can also support good health.
    • Continue socializing. Maintaining a social network during retirement can help people remain positive and healthy. In fact, 37% of retirees miss the social interactions they had while working—and the average older adult spends a good deal of time alone.⁷ Being active with work can help beat those blues.


Control your debt

Today’s retirees are much more likely to owe money than any previous generation. Some are choosing to retire with debt, such as student loan, credit card, or auto loan. Debt can play a role in any financial strategy, but it’s critical to understand the benefits and limitations, especially during retirement on a fixed income. It’s almost never a good idea to take on additional debt to fund new pursuits like day trading or high-risk investing schemes that are outside of your experience or personality type.

We recommend starting to tackle your debt before you retire. Rank each debt by size and begin with those that have the highest interest rate, such as a credit card or short-term loan. While fixed-income mortgage payments are typically easy to plan for during retirement, fluctuating debt can lead to higher monthly expenses, uncertainty, and stress.

Other possible solutions: consolidating high-interest debt into a personal loan at a lower rate, delaying retirement to pay off outstanding debt, or—for those at retirement age who don’t face an early-withdrawal penalty—using funds from a qualified retirement plan to pay off debt that has a higher interest rate.


Next steps

Creating a strategy for retirement is essential, and it’s never too late to start. Only you know what a fulfilling retirement looks like for you, and now is a perfect time to take steps toward the life you envision. By calculating your expenses, getting ahead with saving, and working with a professional, you can set yourself up to retire comfortably—and confidently. We believe that retiring is an opportunity to experience your best life, and we’re here to help make your vision a reality.

Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.

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