The more money you have saved, the less stress about retirement. Sounds logical to us.
Stress about retirement is a very real phenomenon facing millions of Americans.
When it comes to retirement, those middle-aged people who’ve yet to save $100,000 have higher anxiety about what lies ahead than those who’ve already retired and rely on Social Security for most of their income.
That’s a finding of research done by Hearts & Wallets, a financial research firm. It shows about 40 percent of those 45 to 64 who have less than $100,000 in assets register high to moderate amounts of anxiety about their retirement. In comparison, among those 65 to 74 with less than $100,000 in assets, only 30 percent say they had a high to moderate amount of anxiety and 21 percent of those 75 and older felt the same way.
Obviously, the larger amount of assets, the less stress people feel but money doesn’t eliminate it, according to Laura Varas, a founder of Hearts & Wallets.
Of those with $100,000 to $250,000 in assets, 18 percent of those 45 to 54 expressed stress and 22 percent of those 55 to 64 had the same feelings. It fell to 15 percent for those 65 to 74 and rose to 25 percent for those 75 and older.
That’s probably a reflection of their assets dwindling as they age.
For those who have $250,000 to $500,000 in assets, the stress level was 10 percent for those 45 to 54 and 16 percent for those 55 to 64. For the older ages, 10 percent of those 65 to 74 felt a high to moderate level of stress and only 7 percent of those 75 and older felt the same.
Higher up the ladder among those with $500,000 to $1 million in assets, 8 percent of those 45 to 54 have stress and 10 percent of those 55 to 64 have stress. It dips to 4 percent of those 65 to 74 and increases 6 percent for those 75 and older.
If you have $1 million or more in assets, you have low stress levels when it comes to thinking about your retirement. Between 6 percent and 8 percent of those 45 to 64 have stress and only 1 percent of those 65 to 74 say that had such anxiety. It dropped to zero for those 75 and older.
When it came to stress for those with $1 million or more in assets, it was those under 35 who say it’s a bigger concern. Some 21 percent say they felt high levels of stress.
Those who live paycheck to paycheck or Social Security check to Social Security check felt the most stress as is understandable.
Some 43 percent of those 45 to 54 and 57 percent of those 55 to 64 approaching retirement felt high levels of stress. Those 65 to 74 felt the same high level of stress at 57 percent but it dips to only 46 percent for those 75 and older.
The numbers show why a lot of people in focus groups talk about working at least part time and taking Social Security at the same time, Varas says.
“The new itch is how to collect your Social Security while working,” Varas says. “A lot of people are figuring out how to do that.”
A lot of people approaching retirement and looking to take Social Security prefer a less stressful job than they have now when they move to take a part-time job, Varas says.
“They think if they can have a less stressful job and work part-time and take Social Security that it would be cool,” Varas says.
What’s happening, Varas says, is that a lot of people want to start taking Social Security as soon as they can rather than maximize the amount they can make by waiting until 66 or 70. Some people fear Social Security benefits will be cut at some point in the future and want theirs now, she says.
“Some people would rather have a bird in the hand than wait to maximize,” Varas says.
Some financial security firms are even encouraging people to take it earlier than later but that advice is for those with significant assets, Varas says. Some firms believe people spend too much in the early portion of retirement with travel and other expenses and taking Social Security would help reduce the pressure of them drawing down assets.
A reverse mortgage is an option.
For those who have less than $100,000 in assets, 80 percent of their wealth is in their home, Varas says. For those with $2 million or more in assets, only 24 percent of their wealth is in their real estate, she says.
Of those with $500,000 to $2 million assets, the average home of that group is worth $387,000 and they also have a second home worth $190,000.