Dealing with Financial Stress in Retirement

Professional economists warn of an impending retirement crisis in America. Largely gone are the days in which an employee could expect to work for a major corporation for 30 or 40 years and draw a nice pension for life. Today, saving for retirement is left largely to the employee, and employees are not doing the best at this task. It’s estimated that the average retirement account for all working-age Americans, defined as 32-61 years of age, is around $95,000.

When we look at the mean, which is the midpoint for retirement accounts, the average looks even worse. The average future retiree has about $5,000 saved. Those who are closest to retirement are at about $13,000. If we look at the 4 percent safe withdrawal rate that’s usually spouted as a solid goal for sustainable income, the retiree with the median saved would be able to take about about $520 a year. That’s less than $50 a month, which shows that it makes sense that there is a retirement crisis brewing. Needless to say, many older Americans are concerned about their finances. Here are some ways to deal with this financial stress in retirement.

Keep Working

You might have started drawing on Social Security. The average payment for a retiree on Social Security is $1,360 a month. Some will make more; some will make less. Regardless, this is not a huge amount of money. If you currently draw Social Security and you haven’t hit your full retirement age, you’ll get penalized if you make too much in a year. You’ll lose part of your Social Security benefits. However, you can work and make a bit of supplemental income, which means that your Social Security money could go further. This could definitely cut down on your stress levels.


Some parts of the country are just plain expensive. If you’ve lived in Manhattan or San Francisco all of your life, chances are that you’ve got a home that’s appreciated over time and worth a pretty penny. This is equity that you could take out and move, provided that you are willing to leave your community. There are many parts of the country that are cheaper to live in so you could sell your home and buy one in the Midwest or South and take advantage of the excess equity to improve your income.

Take Out A Reverse Mortgage

If you don’t really want to move, a reverse mortgage might allow you to access much of the equity that you’ve built up in your paid-off home. It also permits you to remain in your home until the day that you die, which takes two major sources of stress out of play. You don’t have to worry about where you’ll live, and you don’t have to worry about a lack of money as much as you would have before. The bank will generally take possession of the home after you die, but you can benefit from the money that you’ve put into it over a period of years or decades.

There are several steps that you can take to cut down on your stress that are related to finances during your golden years. Most of these will involve either making more money or accessing the money that you’ve already saved up. One thing is certain, a higher level of cash flow can help you avoid many of the common reasons for stress that people will run into during the twilight of life.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.