These Are Millionaires’ 3 Biggest Retirement Fears

Many Americans feel underprepared for retirement — even millionaires. A 2024 Northwestern Mutual study asked high-net-worth individuals about their most important ”burning questions” regarding retirement planning, and it turns out they have many of the same concerns as the average person.

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Here’s a look at millionaires’ biggest retirement fears, and what they — and you — can do to assuage these concerns.

The No. 1 burning question millionaires have about retirement planning is, “How will taxes impact me in retirement?” with 34% citing this as a concern.

“For high-net-worth individuals, understanding state-specific tax laws is crucial when planning for retirement,” said Daniel Gould, founder and private wealth advisor at Northwestern Mutual’s Gould Financial Group based in Chicago.

“The state you reside in and whether your retirement income is taxable there can significantly impact your finances.

“For example, Illinois does not tax qualified distributions from retirement accounts, making it comparable to states with zero income tax for those with substantial retirement savings in such accounts.”

Average income earners should also keep state taxes in mind when choosing where to retire.

“Additionally, it’s important to remember that any tax deductions received from contributions to traditional 401(k) [plans] or IRAs will be taxed as ordinary income upon withdrawal, not as capital gains,” Gould said.

“This means that high-net-worth individuals who wish to maintain a similar standard of living in retirement may find themselves in tax brackets similar to those they experienced while working. Proper planning is essential to ensure that your retirement income meets your lifestyle needs.”

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The No. 2 retirement planning question among millionaires is, “How much money will I need to retire comfortably?” Thirty percent of millionaires said this is a question they had.

“Determining the amount needed for a comfortable retirement is highly individual and depends largely on your pre-retirement lifestyle,” Gould said. “Those who have been diligent savers and have lived modestly will find it easier to sustain close to 100% of their pre-retirement income. Conversely, those who have been bigger spenders may find it more challenging to replicate their previous income levels.”

No matter which camp you fall into, Gould said that “early planning is key.”

“Utilizing budgeting tools and projections can help maintain a comfortable standard of living,” he said. “Consider factors like travel, entertainment and other lifestyle expenses. Aiming to have at least 75% to 80% of your after-tax pre-retirement income can offer a solid financial cushion, but achieving this requires consistent saving and strategic planning throughout your working life.”

Millionaires’ No. 3 retirement concern is outliving their savings, with 30% asking the question, “Is it possible I could outlive my savings?”

“The risk of outliving your savings is a genuine concern,” Gould said. “Making well-informed financial decisions during retirement is crucial. Market fluctuations in stocks, bonds and real estate can impact your finances, so avoid making emotional, short-term decisions based on market movements.”

Gould said that most retirement planning mistakes occur within the first five years post-retirement.

“The newfound freedom often leads retirees to make significant purchases like cars or second homes, which can strain their financial resources,” he said.

“To mitigate this risk, it is essential to have a well-thought-out plan that dictates safe spending limits. Proper financial planning with conservative assumptions can help ensure that not only will you avoid running out of money, but you may also leave a legacy for future generations.”

Another thing to keep in mind is how your retirement savings are allocated.

“If, for instance, you add permanent life insurance to your financial plan, you’ll get additional benefits that you can use during your life,” Gould said.

“Permanent life insurance pays a lifelong death benefit and includes cash value, which grows on a tax-deferred basis and serves as a source of money you can tap during your life. Since the cash value of most permanent life insurance doesn’t decline with the market, it can be an important asset that works well with other aspects of your financial plan like investments.”

Editor’s note: Information sourced from Northwestern Mutual – Planning & Progress Study 2024.

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