Why retirement planning still feels broken

[UNITED STATES] More Americans now fear running out of money in retirement than death itself. That’s the headline from Allianz Life’s 2025 Retirement Study, which found 64% of respondents more anxious about financial depletion than mortality. It’s a sobering data point—but also a revealing one. It suggests that our greatest financial insecurity may not stem from insufficient savings, but from a lack of clarity on how to spend down assets sustainably. With inflation, Social Security uncertainty, and stealth taxes eroding confidence, many near-retirees feel like they’re staring into a financial fog. But this fear isn’t destiny—it’s a strategic design flaw. Retirement insecurity, at its core, is a misalignment between how we accumulate wealth and how we plan to decumulate it.

Context: The Hidden Weakness in Today’s Retirement Models

For decades, financial advice has hammered home one mantra: save early, save often. That part worked. U.S. retirement account balances hit a record $39.4 trillion in early 2025, according to Investment Company Institute data. But the decumulation side—how retirees draw down assets over a 20–30 year period—has remained woefully underdeveloped.

Inflation only sharpens the urgency. A 2.5% inflation rate halves purchasing power in roughly 30 years. That’s without factoring in the 8% spike seen in 2022, which exposed how vulnerable fixed-income retirees are to sudden price shocks. Yet even now, many Americans keep large cash positions or underperforming bond allocations that fail to hedge inflation effectively. Worse, few understand the sequence-of-returns risk—that poor market performance early in retirement can permanently impair portfolio longevity.

Social Security, too, is caught in a credibility gap. Though it still forms the bedrock of income for millions, younger cohorts doubt its future. The Social Security Trust Fund is projected to be depleted by 2034 unless Congress intervenes, per the 2024 Trustees Report. Meanwhile, the complexity of claiming strategies (especially for dual-income couples) goes largely unoptimized. The result: retirees often leave money on the table, compounding a problem of their own making.

Strategic Comparison: We’ve Engineered for Growth, Not Longevity

Much of the anxiety stems from a system geared toward wealth accumulation, not financial resilience. The 401(k) was never designed to be a standalone retirement plan—it was originally a tax deferral perk for high earners. Yet it became the nation’s de facto savings vehicle, replacing pensions without offering a comparable guarantee of post-retirement stability.

Contrast that with institutional pension funds or sovereign wealth funds. These entities model decades-long liability matching, inflation indexing, and liquidity management. Most retirees, by contrast, operate with fragmented financial literacy, uncertain drawdown rules, and little margin for error.

Some fintech and advisory firms are catching on. Platforms like Income Lab or financial advisors using dynamic spending rules are trying to simulate pension-like certainty with flexible withdrawals. But these innovations are niche, not mainstream. Meanwhile, legacy players continue to market static withdrawal rates (e.g., the “4% rule”) without accounting for inflation shocks, tax cliffs, or longevity risk. That’s not strategy—it’s ritual.

Retirees who understand tax arbitrage—such as converting traditional IRAs to Roth accounts during low-income years—can significantly improve net outcomes. Yet the broader system still incentivizes tax deferral over tax diversification. This creates a ticking tax bomb in retirement, as withdrawals push retirees into higher brackets or affect Medicare premiums.

Implications: Rethinking Retirement as a Risk Architecture Challenge

The retirement crisis isn’t a failure of thrift—it’s a failure of strategic integration. Americans don’t just need more money saved; they need better systems to manage that money in a world of persistent uncertainty. This requires more than financial products—it requires planning frameworks.

Policymakers could start by encouraging default annuitization options in retirement accounts, not just investment menus. For those skeptical of private annuities, partial Social Security delay strategies (e.g., funding years 62–70 with a bridge account) can provide inflation-proof income with zero fees. Both are examples of financial engineering used to reduce behavioral and market risk.

For the private sector, the opportunity lies in offering products and advice that treat retirement like a portfolio of risks—not just assets. This means bundling longevity protection, inflation hedging, tax optimization, and income smoothing into coherent, personalized plans. That’s not just good service—it’s strategic moat creation.

For individuals, the message is simple but urgent: stop thinking of retirement as an end goal. It’s a decades-long phase that demands its own strategy, distinct from wealth-building. The tools exist. What’s missing is a shift in mindset—from accumulation logic to decumulation architecture.

Our Viewpoint

The retirement fear dominating American households isn’t irrational—it’s under-strategized. We’ve built a financial culture fixated on growing the pile, but indifferent to how that pile gets spent. Founders wouldn’t launch a product without a go-to-market plan. Investors wouldn’t back a fund without an exit strategy. So why should retirement be any different? Leaders in policy, financial services, and households need to confront the decumulation gap head-on. It’s not about dying with more money—it’s about living without fear.