Worries About Retirement Income Taxes Increasing Among Americans

A recent study by the Allianz Center for the Future of Retirement, in affiliation with Allianz Life Insurance Company of North America, highlights the growing concern among Americans about the impact of taxes on their retirement income. According to the Q1 2026 Quarterly Market Perceptions Study, 70% of Americans worry about taxes on retirement income, marking an increase from 66% in the previous quarter.

This concern is most pronounced among Generation X, with 78% expressing anxiety about tax effects on retirement income, up from 66% in the prior quarter. Millennials show a similar pattern, with 74% worried, while 64% of Gen Z and 63% of boomers share this apprehension.

Additionally, 70% of the respondents express fear that future tax hikes could impact their tax-deferred retirement accounts, such as 401(k)s and IRAs. Generation X leads this anxiety, with 80% concerned, followed by millennials at 75%, Gen Z at 74%, and boomers at 57%.

Kelly LaVigne, VP of Consumer Insights at Allianz Life, advises individuals with tax-deferred savings to evaluate how potential tax changes might affect their retirement finances. She suggests diversifying assets across various tax categories and considering options like partial Roth IRA conversions, where taxes are paid upfront, allowing for tax-free withdrawals later. LaVigne recommends consulting a financial or tax professional to develop a tax-efficient withdrawal strategy aimed at maximizing retirement income.

The study also reveals that 62% of Americans might switch financial advisors if their current advisor fails to provide strategic tax guidance. Gen X, while particularly worried about future taxes, also holds a more pessimistic view of the current economy. Only 25% believe it is a good time to invest, compared to 39% of Gen Z, 40% of millennials, and 32% of boomers. Concerns about rising inflation and the cost of living affecting their retirement lifestyle are more significant among Gen X.

Moreover, 72% of Gen X and 71% of millennials acknowledge the urgency to save more for retirement but are reluctant to invest due to market volatility concerns, which 79% of Gen Xers find alarming. Fewer millennials (74%), Gen Z (71%), and boomers (59%) share this view.

LaVigne emphasizes that Gen X is approaching a critical period with market volatility potentially impacting their financial future significantly. She advises employing risk management strategies, such as Defined Outcome ETFs or buffered annuities, to create a stable retirement plan amidst these uncertainties.