Over half of Americans think they'll outlive their retirement. Here are strategies to stay secure

More than half of American adults think their retirement savings will dry up before they die, according to a recent survey from Goldman Sachs. About 58% of respondents shared the fear, dubbed "longevity risk," even those with healthy balances.

Basic necessities are eating more into household budgets, Greg Wilson, Goldman Sachs' head of retirement for the asset and wealth management division, said in a statement, "affect[ing] workers at the lowest level of income as well as the highest."

The chunk of the average paycheck that homeownership and higher education take increased by double digits between 2000 and 2025, according to the survey, which interviewed 5,100 working and retired individuals.

1. Work toward setting aside 15% each year

"The first thing you can do is start saving as much as you can right now," T. Rowe Price financial planner Roger Young told CNBC Select. "We recommend saving 15% of your salary towards retirement each year, which includes your 401(k) contributions and any matching contributions from your employer."

Of course, stashing away 15% is easier said than done. Young urges working Americans to start wherever they can and slowly work their way up each year.

"You can set up an annual automatic increase in your 401(k) contribution rate, so every year it bumps it up by 1% or 2%," he said. "That way, you can get to that 15% a lot quicker."

2. Max out tax-advantaged retirement accounts

While most working Americans can expect to receive Social Security, it won't be nearly enough to live on.
Benefits are only intended to replace about 40% of your pre-retirement income.

A 401(k) plan is a retirement fund sponsored by your employe that lets you invest pre-tax money. Many employers automatically enroll employees in 401(k) at a certain contribution rate, but Young encourages clients to contribute as much as they can afford.

"It's good that companies auto-enroll people, but if it's a low contribution level, it's probably not enough for most people," he said.

Each year, the IRS sets contribution limits for tax-advantaged funds. Maxing out your 401(k) contributions is especially important if your employer offers a matching contribution.

A traditional IRA also lets you set aside pre-taxed funds for retirement, but it's not connected to your employer so you can keep contributing if you change jobs. With a Roth IRA, you invest money that's already been taxed, which is helpful if you expect to be in a higher tax bracket when you retire.

You can open a traditional IRA or Roth IRA with a brokerage like Fidelity or sign up with a robo-advisor like Wealthfront and Betterment to determine which investments make sense based on your risk tolerance, goals and retirement date.

3. Build up a cash reserve

As they do in every phase of life, emergency expenses pop up in retirement. But selling investments for quick cash can be damaging in the long run, says Michael Powers, a CFP at Manuka Financial.

"Tapping a cash reserve takes some pressure off your investments in a bear market," Powers told CNBC. A high-yield savings account is recommended for parking cash that you want to see grow but still have easy access to.

4. Consider staying in the workforce

While you can claim Social Security as early as age 62, your monthly check increases the longer you wait. For every year past full retirement age you keep working, Social Security tacks on an additional 8% in delayed-retirement credits (through age 70). 

Delaying from age 62 to 70 can increase your monthly benefit by up to 77%, according to the Social Security Administration.

5. Estimate how much you can withdraw annually in retirement

Are you on track with your retirement savings? One way to find out is to use the "the 4% rule."

"The rule assumes that you withdraw 4% of your investments the first year," Young said. "Then every year afterward, you adjust your withdrawal to reflect the inflation rate. This way, you can continue the same standard of living throughout retirement."

6. Work with an expert

The 4% rule is a general estimate, however. Depending on your lifestyle and expenses, you may need to withdraw more or less. For a personalized strategy, you should work with a financial advisor. They can perform more complex calculations and projections, point out any oversights in your plans and offer alternatives.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every retirement article is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Robert Young, a Senior Financial Planner at T. Rowe Price and Michael Powers, a CFP at Manuka Financial.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investment products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best small business loans.

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