Many (if not most) people think about retirement in terms of saving for the day they leave the workforce and won’t be collecting a paycheck any longer. The prospect of outliving one’s savings is therefore a top source of stress, along with being able to pay escalating health care costs. Perhaps more individuals should plot a strategy to generate income in retirement, says Michael Doshier, vice president, retirement marketing at Franklin Templeton Investments. And no, he doesn’t mean spending your senior years flipping burgers or bagging groceries.

What comes to mind when you think about retirement? Traveling? Spending time with friends and family? Engaging in your favorite hobby? While Social Security can help, it often isn’t enough to cover day-to-day living expenses, let alone to enjoy these and other activities. For those who have not saved enough or invested wisely, retirement can bring a lot of stress. But it doesn’t have to be that way. Let’s look at the roots of some of today’s retirement income anxiety, and what can be done to help alleviate it.

Addressing Retirement Anxiety

Traditional defined benefit (DB) pension plans—which promise to generate a secure source of income in retirement—provided many individuals with reliable retirement income for decades. But they are going the way of the dinosaurs. In 1979, 28% of private sector workers participating in one type of retirement plan had a DB plan.1 By 2014, a mere 2% of private-sector workers participated in a DB plan.2

Of course, the reason DB plans have been disappearing is that private employers have been shifting to defined contribution (DC) plans. These self-directed investment vehicles have provided many individuals with a healthy retirement nest egg. Millennials in particular have embraced them, being the first generation to fully benefit from the sweeping reforms of employer-sponsored plans under the Pension Protection Act of 2006.

Nonetheless, the fear of falling short remains a point of anxiety for many individuals, particularly those who don’t have access to these plans, who haven’t managed to save enough or who have made poor investment decisions.

Each year Franklin Templeton surveys individuals’ thoughts about retirement in our “Retirement Income Strategies and Expectations (RISE) Survey.” In the 2018 survey, running out of money was cited as the top concern of respondents across all age groups.3 Health issues came in second.4

A majority of respondents (52%) also expressed concern about how they will manage income in retirement, even those planning to retire in just a few years. More than half of workers surveyed expressed concern about managing retirement income to meet expenses, and more than a third of those within five years of retirement did not have a strategy to recreate a paycheck.5