How to achieve financial stability for a stress-free retirement

Did you know that 43% of adults say their stress has increased over the past year? That’s up from 2022 (32%) and 2023 (37%).¹

Many sources contribute to that stress, but one major cause for those in or near retirement is a lack of financial stability. It’s the primary focus of nearly 38% of adults.² You probably can’t have a stress-free retirement without it. But what, exactly, is financial stability—and how can you ensure you have it for your retirement?
 

What does financial stability look like? 

That’s a question without a one-size-fits-all answer. The causes of financial stress can vary, but common examples include:³

• Daily expenses (a concern of 54% of Americans)
• Having sufficient current and retirement income (49%)
• Not saving enough for an emergency fund (35%)
• Too much debt (35%)

Financial stability addresses all these concerns: helping you meet current needs, while preparing for future financial goals. 
 

How to achieve financial stability 

Here are five steps to help combat financial stress and instability in your life:
 

1. Build an emergency fund

Stress is often a product of uncertainty—not knowing what may happen and how you’ll deal with it. An emergency fund can help reduce the feeling of uncertainty. It can give you a safety net when life takes an unexpected turn, bringing sudden expenses or a reduced income. Consider saving three to six months of income in your emergency fund.
 

2. Manage debt effectively

Between 1995 and 2022, the percentage of people over age 75 with mortgages soared from 5% to 25%.⁴ If you want to achieve financial stability, get a handle on your debt. For most people, reducing debt and keeping it low is crucial to feeling financially stable. Focus on high-interest debt first, such as credit-card debt, and then address loans with lower rates, such as mortgages.

For more, check out our guide on how to be debt-free.
 

3. Save consistently for retirement

The most direct path to a financially stable retirement is to have more money. For most of us, one of the biggest factors we can control is how—and how much—we save for retirement. That means more than maintaining a savings account. Consider maximizing the amounts you put into tax-advantaged plans such as 401(k)s, IRAs and health savings accounts. 
 

4. Maintain a diversified investment portfolio

Stress is often the mind’s response to risk. You can help reduce your financial risk by ensuring that your investments remain diversified. Diversification can also help you increase the growth potential of your portfolio. That diversification might include stocks, bonds, annuities^* and more, with the mix tuned to factors including your age, financial goals, anticipated expenses and tolerance for risk.
 

5. Live with a balanced budget

If you haven’t been much of a “budget person,” consider becoming one. Living according to a balanced budget can be an important key to financial stability and stress-free retirement. That includes monitoring expenses and income and making prompt budget adjustments in response to unexpected ups and downs. It also means creating a budget that supports your goals for savings and repayment of debt.
 

How to get started

You want to achieve financial stability and a stress-free retirement, but following each of the steps we listed might seem intimidating. Here are the very first things you can do to build confidence and get the ball rolling:

• Educate yourself. If you’ve read this far, congratulations! You’re already learning how to create financial stability in your life. Now go further. Check out webinars and other content online and on social media. You can even meet with a financial professional for an orientation tailored to your needs.

• Assess your financial situation. You can’t figure out how to get where you’re going if you don’t know where you’re starting from. Make a list of your current income, expenses and debts. Be realistic about your cost of living and any liabilities. Be conservative when estimating income. This is a great starting point for creating a budget or meeting with a financial professional.

• Set clear financial goals. What type of retirement do you want and how much might it cost? What are your retirement “must-haves”? Travel? Living near family? Enjoying frequent cultural events or fine dining? How much will your priorities cost? The answers to these questions are crucial to your financial planning.

• Create a comprehensive financial plan. You’ve assessed your current situation and your retirement goals. Now you need a comprehensive financial plan that lays out how to get from here to there. Which strategies—including those mentioned above—are right for you, and in what priority? As with most of the suggestions on this list, your financial professional can help you with planning. 

• Focus on health and wellness. Financial stress, like stress generally, can impact your physical and mental health. Regular exercise, a full night’s sleep and enjoyable activities (such as hobbies and visiting friends) can help reduce your stress, including your financial stress, beyond the specific financial steps you take. 
   

It’s never too early—or too late—to achieve financial stability 

Achieving financial stability for a stress-free retirement is a journey that continues into retirement. It’s not a “one and done” project to complete before you retire. The best time to start that journey, if you haven’t already, is now. Call, email or text your financial professional to begin.