Pre-Retiree Confidence Is Declining: How to Prepare Now

March

Pre-Retiree Confidence Is Declining: How to Prepare Now

March 31, 2025

We feel retirement planning has never been more important, yet confidence in a secure financial future is shrinking.

A March 2025 Fidelity Investments® State of Retirement Planning study reveals that while 7 in 10 of those currently in retirement feel stable, confidence in retirement outlook among pre-retirees has dropped by 7 percentage points from last year.¹

Gen X-ers are the least confident about retirement. “Just over half (53%) of Gen X-ers are confident they will be able to retire on their own terms, and one-third say they may continue to work in retirement to supplement their income,” the study reports.²

Participants cited rising cost of living and healthcare expenses as the top reasons for concern.

According to Fidelity, “Among pre-retirees, 62% are uncertain whether their retirement savings will last forever, and a majority remain wary of the rising cost of health care and what portion of their income will be covered by Social Security.”³

With the average American expected to spend upward of $165,000 on healthcare during retirement – up 5% from a year ago – it’s no wonder people are worried if they have enough saved.⁴

What Current Retirees Wish They Had Done Better

Pre-retiree confidence is declining

In the same Fidelity study, 7 in 10 of current retirees surveyed said the rising cost of living (especially healthcare expenses) has eaten into their retirement savings.

Interestingly, they asked retirees if they could go back in time, what would they do differently…

38% said they wished they started saving earlier
22% would have managed debt better
22% would have prepared better for inflation and rising living costs
19% wished they managed spending better
19% wished they waited longer to retire⁵

And, “Of those who say they did not plan for healthcare costs appropriately, more than half (57%) say health care is more expensive than they anticipated. 4-in-10 (43%) say Medicare covers less than they thought.”⁶

It’s up to You to Plan and Save

Pre-retiree confidence is declining

With pensions all but a thing of the past, it’s up to Americans to plan and save better for retirement, get out of debt, and manage spending better.

According to Fidelity, “61% of Americans in their planning years say retirement savings from IRAs, 401(k)s, or other workplace and small business plans will be one of their biggest income streams – compared to about half of today’s retirees.”⁷

Rising costs, healthcare expenses, and economic uncertainty have made 401(k) savings essential for the next generation of retirees.

But without proper planning, future retirees could face a savings gap that forces them to delay retirement or rely on Social Security more than expected (which is not a recommended strategy). Read more on that here.

Steps to Prepare Now for Retirement

Pre-retiree confidence is declining

With confidence in retirement declining, we believe now is the time to take control of your financial future.

Proactive steps today could make a huge difference later.

#1 Increase 401(k) Contributions – Save as much as possible while still working. Even small increases in contributions may positively impact long-term savings. If you can, maximize your 401(k) contributions.

For 2025, the 401(k) contribution limit is $23,500.

#2 Make Catch-Up Contributions – If you’re 50 or older, take advantage of catch-up contributions to boost retirement savings.

In 2025, workers aged 50 and older are allowed to contribute up to $31,000 to their 401(k)s.

Thanks to the SECURE Act 2.0, workers ages 60 to 63 may contribute an additional $11,250 under the new super catch-up contribution rules.

#3 Get the Employer Match – Many employers match a percentage of employee 401(k) contributions, and it’s a great way to save more without contributing more.

If your employer matches 3% of your salary, you should contribute at least 3% to avoid missing out on free money. Employer matching effectively doubles your contribution rate without additional effort.

Failing to take full advantage of 401(k) matching contributions leaves money on the table that could have compounded over decades.

#4 Avoid Early Withdrawals – Cashing out 401(k) funds before retirement reduces future growth potential and may result in unnecessary taxes and penalties.

#5 Regularly Rebalance Your 401(k) – Rebalancing ensures you are still aligned with your risk tolerance and goals. Failing to rebalance your portfolio could mean losing more than necessary in down markets or not maximizing gains in strong ones. Read more about rebalancing here.

#6 Reduce Debt before Retirement – High-interest debt, like credit cards or loans, may drain savings quickly. Paying down debt now frees up more income for retirement.

#7 Plan for Healthcare Costs – A Health Savings Account (HSA) provides tax-free savings for medical expenses and may help offset rising healthcare costs in retirement.

#8 Delay Social Security – Claiming Social Security at 62 reduces benefits permanently. Waiting until full retirement age or even age 70 can increase monthly payments significantly.

#9 Get Professional Help – If you’re concerned about the quality of your retirement and that you may not have enough saved, get help now.

According to Allianz Life’s 2024 Annual Retirement Study, “Less than half of Americans (44%) say they currently have a plan for how they will take income in retirement. Boomers (67%) are more likely than Gen Xers (30%) or millennials (33%) to say they have a retirement income plan.”⁸

Without plans for retirement income, you may find yourself in the same spot as many elderly Americans are today – relying on family members to take care of you or having to forego essential needs.

Creating plans for retirement income isn’t easy.

It is beneficial to seek help from a professional who can help you come up with a strategy to utilize retirement funds in a way that lasts the rest of your lifetime.

And don’t wait to get help.

Remember, this is your future we’re talking about.

Find out what 401(k) Maneuver may do for your retirement account balance. Click below to book a complimentary 15-minute 401(k) Strategy Session with one of our advisors today.

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