Recent data from F&G Annuities & Life Inc.'s Retirement Reconsidered survey has illuminated significant shifts in the retirement plans of individuals aged 50 and older. The survey highlights a growing trend of pre-retirees and retirees reconsidering their retirement timelines due to various economic factors, particularly inflation. Safe Money Lady™ looks into the key findings of the survey, explores the implications of these trends, and sjines light on the evolving role of reverse mortgages in retirement planning.

Key Findings from the Retirement Reconsidered Survey

The Retirement Reconsidered survey offers a comprehensive overview of the current sentiment among individuals nearing or already in retirement. The key findings include:

1. Rethinking Retirement: Over half (51%) of respondents aged 50 and older are contemplating reentering the workforce or delaying their retirement plans.

2. Increasing Anxiety: A significant majority (68%) of pre-retirees express feelings of anxiety about their retirement, leading to delays in their retirement plans. This marks an increase from 64% in the previous year.

3. Generation X Trends: Among Generation X respondents (ages 50-59), 71% have either delayed their retirement plans or are considering doing so, up from 65% last year. Additionally, half of this cohort indicated a willingness to work in a different industry if they reentered the workforce.

4. Impact of Inflation: Inflation is the most commonly cited reason for reconsidering retirement, affecting 49% of pre-retirees and 44% of retirees.

5. Reverse Mortgages: Financial planners are increasingly open to the concept of reverse mortgages, driven by the need to manage long-term care expenses influenced by inflation.

The Anxiety of Pre-Retirees

The rising anxiety among pre-retirees is a critical issue highlighted by the survey. As individuals approach retirement, the stability and predictability of their financial future become paramount. The increase from 64% to 68% of pre-retirees reconsidering their retirement plans underscores the growing uncertainty in the current economic climate.

Factors Contributing to Anxiety

Several factors contribute to this heightened anxiety:

• Economic Uncertainty: The post-pandemic economic landscape has been marked by volatility, with fluctuating markets and job insecurity. This unpredictability has made it challenging for individuals to confidently plan their retirement.

• Healthcare Costs: Rising healthcare costs are a significant concern for pre-retirees. With longer life expectancies, the need for sustained healthcare funding becomes crucial, adding to the financial burden.

• Insufficient Savings: Many individuals find themselves approaching retirement with inadequate savings. The fear of outliving their retirement funds is a pervasive worry, leading to reconsideration of retirement timelines.

Generation X: Delaying Retirement

The survey indicates a pronounced trend among Generation X respondents, with 71% having delayed or considering delaying their retirement plans. This is a notable increase from 65% last year, reflecting a significant shift in retirement planning within this age group.

Reasons for Delaying Retirement

The primary reasons for this delay among Generation X include:

• Financial Stability: Ensuring financial stability is a key motivator for delaying retirement. Many in this cohort are still recovering from financial setbacks experienced during economic downturns.

• Career Fulfillment: Some Generation X individuals are driven by a desire for continued career fulfillment and professional engagement. This group often seeks opportunities to pivot to new industries or roles that align with their passions and skills.

• Family Responsibilities: Many Generation X individuals still have family responsibilities, such as supporting aging parents or funding their children’s education. These obligations can impact their ability to retire as planned.

Inflation's Role in Retirement Planning

Inflation has emerged as a significant factor influencing retirement decisions. The survey reveals that 49% of pre-retirees and 44% of retirees cite inflation as a primary reason for reconsidering their retirement plans. This economic reality has profound implications for retirement savings and expenditure.

Managing Inflation's Impact

To mitigate the impact of inflation, individuals are adopting various strategies:

• Adjusting Budgets: Retirees are revisiting their budgets to account for rising costs. This often involves cutting discretionary spending and focusing on essential expenses.

• Investing in Inflation-Protected Securities: Some pre-retirees and retirees are turning to inflation-protected securities, such as Treasury Inflation-Protected Securities (TIPS), to safeguard their investments against inflation.

• Delaying Retirement: As reflected in the survey, delaying retirement allows individuals to continue earning an income and bolstering their retirement savings in response to inflationary pressures.

The Evolving Role of Reverse Mortgages

Reverse mortgages are gaining traction as a viable option for managing retirement finances, particularly in the context of long-term care expenses and inflation. The survey notes that financial planners are increasingly receptive to the concept of reverse mortgages.

Understanding Reverse Mortgages

A reverse mortgage allows homeowners aged 62 and older to convert part of the equity in their homes into cash. Unlike a traditional mortgage, the borrowers do not need to make monthly payments. Instead, the loan is repaid when the homeowner sells the home, moves out, or passes away.

Benefits of Reverse Mortgages

• Supplementing Retirement Income: Reverse mortgages provide an additional source of income, which can be particularly beneficial for those with insufficient retirement savings.

• Covering Long-Term Care Costs: The funds from a reverse mortgage can be used to cover long-term care expenses, which are often a significant financial burden for retirees.

• Inflation Hedge: As reverse mortgage payments are based on home equity, they can serve as a hedge against inflation, providing a stable income stream that is less affected by rising prices.

Financial Planner Perspectives

In May, Finance of America executive Steve Resch emphasized the growing acceptance of reverse mortgages among financial planners. This shift is driven by the need to address long-term care costs and the broader impact of inflation on retirement planning. Financial planners recognize the potential of reverse mortgages to enhance financial stability for retirees.

The Retirement Reconsidered survey by F&G Annuities & Life Inc. highlights a significant shift in retirement planning among individuals aged 50 and older. Economic uncertainty, rising healthcare costs, and inflation are driving many pre-retirees and retirees to reconsider their retirement timelines. Generation X, in particular, is experiencing notable delays in retirement plans, reflecting broader economic and personal factors.

The evolving role of reverse mortgages in retirement planning is a testament to the need for innovative financial solutions. As financial planners become more receptive to reverse mortgages, retirees have new avenues to ensure their financial stability and manage long-term care costs.

In this dynamic economic landscape, it is crucial for individuals to stay informed and adaptable in their retirement planning. The insights from the Retirement Reconsidered survey provide valuable guidance for navigating the complexities of retirement in today’s world.

Best regards,

Sharon Ben-David

Your Safe Money Lady™

Protecting Your Nest Egg, Inc.

Phone: (954) 261-5200