You’ve Heard of FOMO. What Is FORO?

Transcript of Podcast Episode 401

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, you’ve heard of FOMO. What is FORO?

Some of us are old enough to remember what it was like in the days before LOL, OMG, IDK, etc., etc. IMO, it can all be very confusing.

Certainly, most people are familiar with the term “FOMO,” or “fear of missing out.” FOMO can sometimes prompt someone to make an irrational financial decision for fear of missing out on what social media indicates is a good opportunity. It’s safe to say that the results do not always match expectations.

In our effort to keep up with the latest financial trends, FORO, or “fear of running out,” has gotten some attention recently. It is the anxiety that near or current retirees feel when they think they might outlive their money. It’s a significant issue for older Americans. As we mentioned not too long ago, on average, Americans are more fearful about running out of money than they are about dying.[1]

In many, if not most cases, there are legitimate and well-thought-out reasons for experiencing FORO. Many people are living longer than expected, dealing with increasing healthcare costs, and facing higher inflation than they expected. Add to that uncertainty when it comes to government benefits, market volatility, and the fact that many people just haven’t saved enough for retirement.

And without a regular paycheck, real people do sometimes run out of money in retirement. On average, people’s net worth will tend to peak just before retirement, then start dropping once they get into their 70s.[2] The results can be tragic if the drop goes all the way—or almost all the way—to zero.

But the fear is not always justified. In a recent article at WealthManagement.com, author Evan Cooper makes a distinction between “rational” and “irrational” FORO.[3]

Irrational FORO often goes unnoticed. As Cooper points out, some people have become used to living below their means, to the point where they just don’t feel right about spending more in retirement, even though they can easily afford it. Other people underspend simply because they don’t have an advisor to guide them, and they don’t know how much they can afford without the risk of running out.[4]

Either way, the result can be a lower quality of life, missed experiences, and making more of a sacrifice than is necessary.

Renowned author David Blanchett, head of Retirement Research at Prudential Financial, has taken a hard look at what retirees spend vs. what they can afford. Blanchett has found that, after adjusting for inflation, retiree spending tends to decrease over time. This applies across the board, even for people with more than enough assets to live comfortably and without worry.[5]

Blanchett indicates that irrational FORO is more of a problem than many people realize. As he puts it, “those retirees who could materially increase spending do not tend to do so, especially those who are older and spending at higher levels. In other words, while there are both circumstance and choice elements to the observed reductions in real spending, they cannot be written off entirely to circumstances.”[6]

There are ways to fight back against irrational FORO. Having a guaranteed lifetime income, often in the form of an annuity, could make a difference. Much like an old-style pension, an annuity may give you the confidence you need to spend your money without worry.[7]

Potential long-term care expenses also play a big role when it comes to FORO. People worry that they could have years of comfortable retirement, only to face a devastating decline with huge long-term care expenses towards the end. They may even know someone who has had this experience. Being bankrupted by long-term care in your later years is a real possibility.

But planning ahead—using either a life insurance policy with a chronic illness rider, or a long-term care insurance policy—can go a long way in helping your peace of mind, help to relieve the symptoms of FORO, and maybe even improve your quality of life in retirement.

Are you suffering from FORO? Is your FORO rational or irrational? Your Security Mutual Life Insurance agent can help you figure things out. Your Security Mutual Life insurance agent can help assemble your financial team and coordinate with your attorneys and tax professionals to review your situation, and to determine the insurance plan that will best suit your needs and objectives.

[1] Allianz Life Insurance Company of North America. “Nearly 2 in 3 Americans Worry More about Running Out of Money than Death.” Allianzlife.com. https://www.allianzlife.com/about/newsroom/2024-Press-Releases/Nearly-2-in-3-Americans-Worry-More-about-Running-Out-of-Money-than-Death (accessed June 9, 2026).

[2] DeMatteo, Megan. “Average net worth of Americans 75 and up: How much should you have saved?” CNBC.com. https://www.cnbc.com/select/average-net-worth-of-americans-ages-75-and-up/ (accessed September 3, 2026).

[3] Cooper, Evan. “Rational and Irrational FORO.” WealthManagement.com https://www.wealthmanagement.com/retirement/rational-and-irrational-foro (accessed September 3, 2026).

[4] Id.

[5] Blanchett, David. “How Spending Evolves in Retirement: A Smile, a Smirk, or Something Else?” Financial Planning Review. https://onlinelibrary.wiley.com/doi/10.1002/cfp2.70032 (accessed September 3, 2026).

[6] Id.

[7] TIAA. “How to enjoy your retirement savings and avoid FORO.” TIAA.org. https://www.tiaa.org/public/invest/services/wealth-management/perspectives/how-much-income-in-retirement-fear-of-running-out (accessed September 3, 2026).

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