If the very mention of the phrase “retirement planning” makes you shudder, you’re definitely not alone—2026 survey data from the National Institute on Retirement Security says somewhere between 40 and 55 percent of Americans feel unprepared for or lack confidence in having stability in their retirement years. Another survey says 47% of America’s workers believe they’ll never be able to fully retire.
It’s safe to say we as a nation can do a lot better setting our employees up for retirement success. A part of that may be improving how we educate people on retirement planning and what all it entails. Cue Dr. Jesse Jurgenson, an Assistant Professor of Practice within the Texas Tech University School of Financial Planning. He formerly spent three years teaching at the University of Alabama in Tuscaloosa as a personal finance pro before heading to Lubbock. While his research dives into personal finance habits for all ages, he’s specifically interested in how those decisions change throughout the course of life, making him the go-to for our 2-part conversation on retirement.
TRANSCRIPTION:
Lacey: (Intro) For Alabama Public Radio, I'm Lacey Alexander. This is Simplified. It's a show where we take the complex and make it easier to understand. Hot button topics, buzzwords, and current events, all made more digestible through interviews with experts. Your questions answered and your confusion remedied. I'm not afraid to ask dumb questions, and neither should you be. It's how we take the world around us and make it simpler.
This is part two of our conversation on retirement planning. If the very mention of the phrase "retirement planning" makes you shudder. You're definitely not alone. 2026 survey data from the National Institute on Retirement Security says somewhere between 40 and 55 percent of Americans feel unprepared for or lack confidence in having stability in their retirement years. That same source says roughly half of the country's population say they have no retirement savings put away. Another survey says 47% of America's workers believe they'll never be able to fully retire at all.
It's safe to say we as a nation can do a lot better setting our employees up for retirement success. A part of that may be improving how we educate people on retirement planning and what all it entails. Q. Dr. Jesse Jurgensen, an assistant professor of practice within the Texas Tech University School of Financial Planning, he formerly spent three years teaching at the University of Alabama in Tuscaloosa as a personal finance pro before heading to Lubbock, while his research dives into personal finance habits for all ages, he's specifically interested in how those decisions change throughout the course of life, making him the go-to for our two-part conversation on retirement.
Lacey (Interviewing): Let's transition now into some audience questions. What taxes apply to Social Security/401k/defined benefit retirement income?
Dr. Jesse Jurgensen: Taxes are a huge consideration in retirement because depending on where your money is how it's going to be taxed. So there's a bunch of different types of accounts that money could be in that are taxed differently. So for example, money that is taken out from a 401(k) or a 403(b) retirement account, those are generally going to be taxed at full ordinary income. But keep in mind that in the U.S., the federal tax system was what we call progressive, which means as a person's income increases, they generally pay a higher tax on those last few dollars of their income.
And so, what you can do with your financial planner is work to reduce your taxable income, and possibly pay even lower amounts of tax in retirement if the money went into a Roth R O T H Roth designated account, taxes were paid when the money went into the account, and we can't double tax it. Which means that when that money comes out of a Roth designated retirement product, that's that is not going to be taxed again, and so the idea here is where is the money coming from, and did we hedge our vet? Do we have a little coming from a 401k? Do we have a little coming from a Roth designated product? How do they balance each other out, and then you have Social Security. Places can be different; not the full amount of of Social Security is taxed; only a portion. And states can have different rules on that.
So, for example, Alabama does not does not assess state taxes on on Social Security, but federal is a consideration. Federal taxes, and maybe somebody moves to a different state where they treat it differently. We want to really have that money be able to set towards a goal. And by all means, emergencies happen to everybody, and it's your money. And definitely talk to a tax professional if you want to look at. But it definitely should be towards the bottom of the of the options because we want to let that money grow for us. And we just my understanding of linear time is no going back. So we want to let that work for us as much as possible.
Lacey: Let's get to part two of Jeff's question. What do you think retirees often get wrong about Medicare?
Dr. Jesse Jurgensen: I would say the most common misconception that I hear about Medicare is that they think it covers things like long term care, nursing homes, assisted living. And it does not. Medicare is a wonderful, very helpful program for seniors, but we also know that more and more people are finding themselves in in assisted living care and long term care, and those can be very expensive, and that we don't plan for, and Medicare does not cover of those types of services. It is purely health insurance, and so what happens is people will think that 'oh, I need to start looking at assisted living, or I'm ready to take the next step, or maybe I need to go into a 24-hour nursing care' and Medicare does not cover those, and so thinking about 'okay, do I have supplemental coverage, or how do we pay for these services that may cost well over $10,000 per month, depending on the facility and and the type of care that you need', so that is a common misconception.
The other thing is that people may incorrectly believe that Medicare covers everything, and it does not. There are many different parts to Medicare. There may be a supplement to prescription drug coverage. There may have to be supplements to things like dental care or vision care, depending on your own individual and own individual healthcare needs. And so Medicare is great, but it has very severe limitations that may not meet your needs at all. Which means that really a person may continue to pay a good amount of money in Medicare different parts, maybe a Part D or a Medigap insurance to help cover the things that it does that Medicare doesn't cover. That could still be a significant amount of money every month that they were not planning for unless they really look deep into what Medicare does and does not cover, and what does that mean for them in their own personal situation?
Lacey: So it is safe to assume that your employer-provided insurance and Medicare probably have some differences.
Dr. Jesse Jurgensen: Yes, I think that is a very strong possibility. And so, looking at what are your unique needs, and are there any specific treatments or prescriptions that you need on an ongoing basis, or your dependent needs? In looking to see, do I need to find additional prescription drug coverage, or am I going to get a really not fun surprise going for my refill, my first prescription refill in retirement, and now I'm footing a big bill when maybe I haven't before.
Lacey: Awesome. Let's go now to Jason's question, which is slightly situational. Jason says, "What does one do if they are within a year and a year and a half in retirement, but they feel not prepared?" He says, in his specific situation, it's a small pension, social security, and VA disability to rely on. Do you have any advice for him on how he can make that situation a little bit better?
Dr. Jesse Jurgensen: That's a great question. I think the first thing there is don't panic. Is that we we don't want to kind of overstate and kind of make panic decisions. That does not mean we need to take on excessive risk in order to try to catch up. We don't want to. We do not want to turn a retirement savings problem into a gambling problem. And so what we can do is get organized at that stage, and saying that that this person has some wonderful and very beneficial sources of income. They're very fortunate to have some really good resources. So I think the first thing that that Jason and people in similar situations is to start looking at okay, what do you have coming in in retirement?
So looking at those those different options like Social Security, VA, or Veterans Administration benefits, small pension. What's coming in, and also what is going out? What are the anticipated expenses in retirement? Some people may have very similar expenses. Depends on what it is their retirement looks like. The only thing that really starts causing a problem is when there's a gap between what's coming in and how much retirement costs your household. And so instead of being very anxious and worried about it, we need to define what the problem is, because the problem may not actually be that big.
On the flip side, it could be large, but also keep in mind that there may be other options. A lot of people find that if there is a gap between what's coming in and how much retirement life costs. Maybe even something like part-time work may fill that in. And so thinking about how do we define what the problem is and not being paralyzed by this sense of 'I'm not ready, I'm not ready.' Because we can only start solving the problem once we're able to to correctly define and face it.
Lacey: I really like Rob's question. When someone asks, or someone asks you professionally, "Can I afford to retire?" What is the first thing you look at? There's, I have some teacher friends, and in Alabama, once you've been teaching for 10 years, you can get out of there if you want to. But the question is, should you?
Dr. Jesse Jurgensen: Yes, that's a fantastic question, and that's a lifestyle question as much as it is a money question, because somebody can have the same amount of money between two households, and it means vastly different things. If you are going into retirement, maybe with a fully paid-off mortgage, well, that's a choice to stay in that house. That's a huge burden that is no longer there. Is somebody going into retirement with possibly debt, or do they have high cost credit card debt, or still have still have auto loans? And so that is a a very broad question about what types of bills does somebody have, what is going to continue, and how much is there currently saved.
I have talked to many people over the years that envision a very simple life in retirement, in severe downsizing that you know is not right for everybody, but for some people that's that's what they want. And a number that would make me nervous, we were running the numbers and potential simulations and found out that hey, based on what makes them happy, this was plenty. They they are in a good position that they should not be ridiculously anxious about it.
On the flip side, that same amount of money for a household that has a vacation home has the boat, is still supporting an adult child. That would be vastly different, and so I think the first question there of am I ready to retire is well, what does that look like for you? What does that mean to be retired? Because for a lot of people that just means part-time work. For some people, that means downsizing their house. For some people, that means really no change. And so I I think talking to other people can be beneficial as for to kind of get what their what their view of retirement is. But we need to be very skeptical and be very concerned about taking their values and their priorities and giving it to ourselves when ours may be different.
So, am I ready to retire? Is a highly personalized decision, but we can do a similar formula and see what matters to us, what's coming in, and what's going out, and making your own decision about what's best for you and the people you love.
Lacey: And the second part of Rob's question: What are the most common retirement mistakes you see?
Dr. Jesse Jurgensen: I would say the the some of the most common retirement account concerns or mistakes that I see is possibly getting too conservative with their investments right away. We are commonly seeing retirements that are lasting 30 plus years, and what that means is that not all of that money is needed immediately. Some of that money still has a 30-year, what's called time horizon until it's needed, and so the idea is that not all of that money needs to be converted into cash immediately. That's a very old-fashioned type of advice, is thinking that the money needs to be made more conservative in investments as a person converts to retirement. That's not entirely true.
There should be a spectrum in which we still think that some of the money is needed immediately. Some of that money is going to be needed in 5-10 years, but some of that money could be needed in 30 years if a person is living to age 95, which is not uncommon anymore. And so thinking that I just need to convert all this money into cash and and highly conservative investments because I'm retired just isn't really accurate anymore, there still needs to be a plan for that portfolio that has near-term, mid-term, and long-term purposes, even when somebody may already be 60 or 65 years old.
Lacey: Excellent. Full disclosure: this is a retirement planning episode, but I snuck in a question from a listener that's already retired. From Carla: Since retiring, I feel like I've gotten worse with managing my money. Why do you think this is, and do you have any advice on how I can manage this new lifestyle a bit better?
Dr. Jesse Jurgensen: I think retirement just brings up a whole new set of potential decisions, and now you just have a lot of time, which can be wonderful to in a lot of different ways. But if we start trying to think of of our behavior and purpose in life, it's understandable that we may now have the ability to do a lot more things than we did when we were working 40 plus hours a week. So when you now have the availability to go and do things and and maybe increase shopping or maybe increase travel, that can be wonderful for our mental health. But as with most things, it needs to be done within ways which we can actually afford to do so, and find different ways to fill kind of that entertainment void as well.
And so it's it is fine to enjoy yourself. There is no rule saying that you can't enjoy the money that you've worked for decades for. But keep in mind that also a lot of times people live longer than they think, and that money may need to last a long time. So it's finding other joys, it's finding other purposes other than say that that costs money, and that could be even things like increasing volunteering, and and now that you now have more times for friends, well, maybe that doesn't have to revolve around an event that costs money. You know, maybe it's just going to a park, enjoying a free concert. All of these things can be great ways to increase our social lives, increase our mental health, still find fulfillment and joy outside of the workplace, but don't cost any money.
But it's kind of how we approach it. What do we do with our time now? And one thing that commonly increases in retirement is travel, because now you have the time to go see the kids, the grandkids, the Friends, the family, that's great. But what I want them to be doing is building that into their spending plan, and understanding this is what makes me happy. This is a priority. Let's plan for it instead of kind of treating it like a surprise. So do what you love, increase those personal relationships, but keep in mind that we also have some constraints. So let's make sure that we're planning for it instead of treating it as a surprise.
Lacey: Well said. Let's go back to some Lacey questions, and we'll close with these last few. In your years of research, Dr. Jurgensen, has there been anything that's really surprised you? Has there been anything in your research that really concerns you?
Dr. Jesse Jurgensen: I would say that the surprise and the concern is that people are living longer, and the idea that when we think about retirement planning, I mean, one of the first questions your financial planner may ask you, or at least allude to, is well, how long are you going to live? Because that tells us how long that this money needs to last. And when we think about well, that longevity question is very difficult. Not only is it impossible to know it can be kind of uncomfortable to think about, and when we think about okay, well, what is the potential that I live to 90-95 years old? It is a lot different, and what do those last years look like?
And for many people, that does include a lot of healthcare, and that can be very difficult. Also, what that means is that even people who want to leave something for their friends, their family, their charities or organizations or or causes that they're passionate about, they may not be able to fulfill those because the those last years are are comparatively expensive because of the cost of healthcare. There may not be much left. For example, maybe it forces the sale of the family home that they had wanted to to pass down to the next generation. But now that money is needed to take care of them, or they outlived their money, and so I think what we know is is that planning to a the potential of one spouse living to age 95 is increasing in probability, but it's also increasing the years in which somebody may be in assisted living or 24-hour care, which can also be very expensive as well.
And so, looking at things like long-term care insurance, is that a possibility? How much does it cost? What does it cover? Maybe something that some people may want to look into earlier rather than later to see is that something that could help reduce that. The other thing is that I found in my research, and what we know is that kind of our own mortality is a very uncomfortable subject for a lot of people, and understandably so. But that also means that we need to be talking to our friends, family, and loved ones about what do we want for our lives, what do we want our our retirement years to be like, and what do we want to happen with any of our money, not just cash, but things that are important to us, family heirlooms, family houses. Have those conversations. Make sure people are aware of what it is you want, and talk to professionals like estate planning lawyers and certified financial planners. And let's get a plan together.
And let's just not count on luck and saying I'm gonna have time later. I'll do it later. That's not always the case for everybody, and so the time to do that stuff and have those conversations and draft those documents is now. Instead of thinking I always will get to it later, we're busy. We don't always get to it later. So let's get to it now.
Lacey: Even in death, we are discussing money.
Dr. Jesse Jurgensen: Yes, it it is an overarching theme throughout our lives.
Lacey: Yes. What do you want everyone in the whole wide world to know about retirement planning? Are there any misconceptions you'd like to correct?
Dr. Jesse Jurgensen: I want everybody to know that it is up to you. You can make your own retirement what you want it to be. That means that if you want to continue working, that's fine. But keep in mind that not everybody gets to make that choice. A lot of times, people are limited by their own health, their mobility, layoffs, things like that happen. But do not think that somebody else's retirement has to be yours. Make your own decision about what you want that to be, and what brings you happiness, and what brings you joy. And just because somebody wants to stop working doesn't mean you have to stop working. A lot of people find personal fulfillment. I love my job. I would love. I want to keep doing it, and that's okay too.
The other thing is, I want people to stop using these very broad general rules of thumb and think that they apply to everybody perfectly. They don't. This idea that you need to replace 80% of your working income in your retirement years, or this magic 4% withdrawal rate, that is a very broad starting point, and it's a good screening tool. But it is not meant to be a an absolute rule for every household, so it's a good place to start. But do not think that that these are red lights, green lights in order to do things, and be careful about where you're getting your information. Very broad, general-based posts and articles. Do not take those for absolutes, and talk to a professional about what does it look like for you. And they could be good benchmarks, but they should not be applied to every situation. And think that that is right. That could be a recipe for disaster Later on.
Lacey: And the last thing that I want to bring up: people that are making great money still struggle with retirement. For those that are low income that don't even have it in them to care about retirement right now, are there resources for people that maybe need a little help?
Dr. Jesse Jurgensen: Yes, there there are resources for people that that have low and limited income, and just keep in mind every little bit helps. Every little bit helps in putting money away and letting that time work for you as well. But a lot of it is. Is behavior, and I want to be clear that having that behavior of savings is important. But you brought out that people who have comparatively high income can still struggle because that may be a behavior issue, not really a money issue at that point. But if there are money constraints, their retirement may look more like part-time work than than it is later on, but it's also looking for any type of government supports.
Maybe there is an opportunity for things like Medicaid, which is an income-based, or other types of public support programs that may be available to help with some of those higher healthcare costs, but remembering that every little bit helps. But retirement may have to include at least part-time work. Get an estimate of what that Social Security benefit actually is, and how can we increase that? Making sure that if that's something that's important to us, that we are paying into the system, so that our our potential benefit can grow, also.
Lacey: Wonderful, Dr. Jurgensen. Is there anything that I didn't get a chance to ask you about today that you'd like to platform before we go?
Dr. Jesse Jurgensen: No, I think you're doing a fantastic job. I just want people to know too that to start now to think about their retirement and start thinking about what is important to them and talk with their partner and say what do you want to do in in our later life and know that retirement is is only the beginning of a different stage it's not the end of anything it's not the end goal. It just means things look different. But that is a wonderful time to start just having more flexibility. But with more flexibility in our time and our resources come a lot of important decisions. And to not take them lightly, and make sure that you're talking to professionals who can help you understand your options and make those decisions as a partnership, because a lot of this is going to be how are we going to to grow older together and enjoy the money that we worked so hard to to do that and make sure that we're we're hitting both of our values and both of our priorities in really enjoying life together.
Lacey (Outro): You've been listening to Simplified. Special thanks to our expert guest, Dr. Jesse Jurgensen. Have a topic you'd like to hear next, or an expert with ties to our state that you think I should check out? Then email me at simplified at apr.org. This show is a production of Alabama Public Radio, a service of the University of Alabama.
Local support for Simplified is provided by The University of Alabama Online.
