MW Gen X, staring down retirement, is the group most afraid of running out of money right now. They should be.

By Paul Brandus

Tariffs and inflation are fueling investor concerns

The big stock-market selloff that greeted investors Thursday morning - the day after President Donald Trump unveiled his tariffs against, well, just about everyone - has only served to reinforce one of Americans' biggest fears: running out of money.

The fear is widespread. An Allianz study found that nearly two-thirds of us - 63% - fear being penniless even more than we fear death.

Perhaps not surprisingly, the group that is closing in on retirement - Generation X, born between 1965 and 1980 - worries about this the most, Allianz's research says, with 71% saying they fear running out of money more than they fear death. Millennials, born between 1981 and 1996, are close behind at 64%, while 53% of baby boomers, who were born between 1946 and 1964 - and many of whom are already retired - say the same.

Along with the current stock-market selloff, the length and severity of which is anyone's guess, such fears have been fueled by inflation, which over the last few years has eroded the purchasing power of whatever savings Americans have been able to squirrel away. Now headlines about Social Security being under attack are adding to the angst.

Baby boomers worry about inflation the most, Allianz's research says, with 48% saying they are fearful that higher prices will make it more likely they will run out of money. Among millennials, 44% feel that way. Meanwhile, what does Gen X know that the rest of us don't? Only 39% of them say inflation is contributing to their fears.

Fueled during the pandemic by multitrillion-dollar stimulus spending under both the Trump and Biden administrations, inflation peaked at 9.1% in the summer of 2022. It currently stands at 2.8%, although many economists warn that Trump's tariff plans could send prices right back up.

Read: Buckle up: U.S. economy runs higher risk of recession due to tariff turbulence

The only way to maintain your standard of living is for your assets to grow at a rate that exceeds the compounding effects of inflation. But as many Americans know, the higher the inflation, the harder this is to do.

This helps explain the findings of the Boston College Center for Retirement Research, which reports that the wealth of middle-income retirees fell by 14.2% between 2021 and 2025 and that nearly a quarter of retirees and near-retirees increased their withdrawals from their investment funds - by an average $1,810 a year.

The problem is that drawing down your assets to maintain your standard of living today can negatively affect your standard of living tomorrow. That's because once those assets are gone, they can't grow and compound, which is how wealth increases. Of course, the alternative - lowering your standard of living a bit today to adjust - is unpalatable. No one wants to live in lesser circumstances today than yesterday.

This is a classic dilemma: a choice between two undesirable options.

So who's likely to be hurt more in such a situation? One group in particular, according the Boston College study.

"Retirees are hurt more than near-retirees because, outside of Social Security, their income is less indexed to prices and they hold less fixed-rate debt," write Laura Quinby and Jean-Pierre Aubry, the study's authors.

Near-retirees, meanwhile, are still working and may continue to receive raises, which can help mitigate inflation's bite. Not surprisingly, higher-wealth households - in both the retiree and near-retiree categories - are better insulated from inflation because they often hold more assets like stocks, which tend to grow in value over time and can also contribute to current income in the form of dividends.

Studies like these tend to reflect a broader observation: Most Americans have a gnawing insecurity about their retirement finances. In a prior era, American workers could generally count on the "three-legged stool" to support them in retirement: a defined-benefit pension, personal savings and Social Security. Today, all three of those legs appear rickety.

On the pension front, out of 142.3 million workers, fewer than a quarter - around 32 million - have a defined-benefit pension plan, according to the Employee Benefit Research Institute. And of these, only 12 million are in the private sector. That means if you want a job with an old-fashioned defined-benefit pension, you should probably look for a local, state or federal government job - although I wonder if future generations of federal workers will have these.

What about the second leg of this stool - personal savings? Based on Federal Reserve data, the median retirement savings among retirees and near-retirees is far from encouraging:

   Age 45-54  $115,000 
   Age 55-64  $185,000 
   Age 65-74  $200,000 
   Age 75+    $130,000 

Against these modest sums, consider that Fidelity Investments, the Boston-based asset-management giant, estimates that the average 65-year old will, during their lifetime, spend $165,000 on just one thing - healthcare - above and beyond what Medicare (which is currently under attack, incidentally) will pay for.

Read: Retiree healthcare costs jump almost 5% to $165,000 - more than double the 2002 rate

Of course, these savings may increase over time, depending on how they are invested, but they will also be eroded by inflation. Will these assets keep up with, and hopefully exceed, inflation?

This brings us to the third leg of the retirement stool - Social Security, which we've discussed at length over the past few weeks. This venerable program has kept its obligations to the American people for nearly nine decades - President Franklin D. Roosevelt signed Social Security into law in the summer of 1935 - but its vaunted trust fund is projected to run out in just a few years. This would mean, according to current projections, a 21% cut for future beneficiaries.

The Trump administration has also been hacking away at Social Security's infrastructure - closing offices and planning major layoffs - despite the agency's struggles with staffing shortages, antiquated equipment and a surging number of retirees. Currently, an estimated 10,000 baby boomers retire every day.

Don't miss: Social Security is on a path to privatization, experts warn, led by Elon Musk's 'DOGE'

Inflation. Insufficient savings. Healthcare costs. Political uncertainty - chaos and turmoil, some say. These are anxiety-filled and disturbing times. No wonder Americans worry about running out of money.

So what can you do? Keep working for as long as you can. Cut expenses if you can. Save as much as you can. And as that famous British saying from World War II exhorts: Keep calm and carry on.

-Paul Brandus

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April 03, 2025 16:49 ET (20:49 GMT)

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