'Burning Questions' About Retirement Answered by Experts
Across every generation, Americans are saving sooner, planning to retire earlier and expecting to live longer, according to the Northwestern Mutual 2026 Planning and Progress Study. With retirement on the mind for so many, there are also some “burning questions” that many Americans want answered.
Here are the top burning questions from the Northwestern Mutual study answered by experts.
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How Much Money Will I Need To Retire Comfortably?
According to Northwestern Mutual, Americans believe that they’ll need $1.46 million to retire comfortably, up more than 15% from last year.
Cody Schuiteboer, president and CEO of Best Interest Financial, said it is impossible to answer definitively for most individuals and couples, but what's most helpful for his clients is a combination of the 80% rule and the 25 times rule or plan to replace 80% of your pre-retirement salary per year, then multiply that annual figure by 25 to calculate your retirement portfolio.
“So if you currently earn $100,000 annually, chances are good that you'll want roughly $80,000 in annual retirement income, which implies a total portfolio of $2 million, taking into account partial replacement via Social Security,” he added.
Will Social Security Be There When I Qualify for It?
Social Security faces a funding crisis as the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to deplete its reserves between 2032 and 2034, according to the program’s Trustees.
But those cuts aren’t a done deal and lawmakers still have options to prevent them. Also, a cut doesn’t mean Social Security won’t be there.
Brennan Kolar, founder of Atlas CPA Index, said you can claim Social Security as early as 62, but the benefit gets cut by about 30% compared to waiting until the full retirement age of 67.
“A worker entitled to $2,000 a month at full retirement age gets $1,400 at 62 or $2,480 at 70,” he added. “The monthly difference between the earliest and latest filing dates is over $1,000 for the rest of life.”
Is It Possible I Could Outlive My Savings?
It’s a scary thought, but Shuiteboer pointed out that there are other sources of income and savings. This includes Social Security, which provides $2,026 per month for the average retiree, according to the Social Security Administration (SSA), as well as Medicare, SSI and SNAP.
“Many also continue working in their seventies to increase their monthly cash flow,” he explained. “In my opinion, the only insurance against this outcome is a disciplined monthly savings rate throughout your 40s and 50s – you simply won't find a financial product that can solve such issues for you.”
How Can I Plan for Potential Long-Term Care Needs?
Medicare doesn’t cover extending nursing home stays or home health aides, so it’s something everyone must plan for ahead of time. “A single person planning for nursing home care should budget for $300,000 to $400,000 in potential costs,” Kolar explained.
Hybrid life insurance is one option, Kolar noted, as traditional standalone long-term care insurance costs continue to rise. You can also self-fund if you can set aside $300,000 to $500,000.
“Medicaid covers long-term care after assets are spent, down to about $2,000 in most states, but most facilities accept Medicaid only after the resident has paid privately for at least two to three years,” Kolar said.
What If Inflation Rises When I’m Retired?
According to Kolar, inflation is the most underrated retirement risk in modern planning.
“At 2% inflation, $1 today buys about 55 cents in 30 years,” Kolar said. “The real danger isn't average inflation over a 30-year retirement, since most balanced portfolios of stocks and bonds keep up over long periods, but rather inflation that hits in the first five to 10 years of retirement when you're locking in spending levels and your stocks haven't had time to grow.”
Social Security does account for inflation with annual cost-of-living adjustments (COLA) and many investors keep more of their portfolios in stocks as they’re the only asset class that has consistently beaten inflation, Kolar added.
“Cutting discretionary spending by 10% to 15% during high-inflation years can add three to five years to portfolio longevity,” he said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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