(BPT) - By Rob Williams, Managing Director, Financial Planning, Retirement Income and Wealth Management, Schwab Center for Financial Research

There are a lot of cautionary tales in the news these days about how unprepared people are for retirement, painting a rather bleak picture of widespread financial insecurity. But the reality is quite different.

We recently surveyed more than 1,000 Americans and found they actually feel pretty optimistic about their retirement plans. Six in 10 people say they are not concerned about having enough money to live off of in retirement, and most also feel financially prepared. The numbers are even better for people who are already retired or semi-retired. Over 90% say they've saved enough to live comfortably and are confident about their overall financial situation.

None of this means people aren't worried at all. What we found is that most retirement anxiety centers around things beyond people's control, like inflation, market fluctuations, rising health care costs and potential changes in government policy. If you fall into that category, here are five practical strategies to help ease those concerns and provide greater peace of mind.

1. Make sure your portfolio reflects your current risk capacity

While "risk tolerance" refers to the amount of market volatility you can stomach, "risk capacity" is about determining how much money you'll definitely need over the next one to four years. Think of it as the financial buffer required to cover your short-term expenses without being affected by market and economic swings. Once you know your risk capacity, set aside the appropriate cash and split it into two types of cushions:

• Money you know you'll need in the next year - Consider putting this into high-yield checking or savings accounts, money market funds, or CDs with maturities under 12 months.
• Money you'll need in the next two to four years - Consider putting this into high-quality short-term bonds, bond funds, or CDs with maturities between two to four years.

2. Stay Invested and Diversified

A diversified portfolio could potentially help navigate the ups and downs of the economy. And spreading your investments across various asset classes - like stocks, bonds and real estate - may create a cushion against market volatility. Stocks, in particular, have historically outpaced inflation over the long term, helping to preserve your purchasing power. Overall, staying invested through market cycles rather than reacting to short-term fluctuations can be one of the best strategies for maintaining your wealth in retirement.

3. Revisit Your Emergency Fund

An emergency fund is crucial at any stage of life, but it becomes especially vital in retirement when income is often more fixed. In addition to your cash cushions, aim to keep enough in your emergency fund to cover about a year's worth of expenses, minus any guaranteed income from sources like Social Security or pensions. A high-yield checking or money market account can be a great place to store these funds, allowing for easy access in an emergency without penalties or delays.

4. Plan for Long-Term Care Costs

One of retirees' biggest worries is the potential cost of health care, especially long-term care. To prepare, start by answering three fundamental questions:

• Who will provide care if needed?
• Where do you want that care to be provided?
• How will you pay for it?

From there, consider consulting with a financial planner to explore options that align with your needs. This might include long-term care insurance or other strategies to ensure your assets are protected. Addressing these concerns proactively can reduce stress about unexpected health costs in the future.

5. Keep Perspective on Changes in Washington

Political shifts, such as a new administration or changes in Congress, can create anxiety about taxes, Medicare, Social Security and the markets. However, it's important to remember that market movements are more often driven by corporate earnings, economic data and central bank policies than by political changes.

Additionally, there's usually a significant gap between campaign promises and actual policy changes. Legislative processes are slow and often result in watered-down versions of initial proposals, so avoid jumping to conclusions based on political rhetoric.

Stick to your long-term investing plan and avoid making emotional decisions based on the latest headlines.

Retirement is a major life change, and even if you're generally confident about your retirement savings, it is normal to be anxious about factors outside of your control. If you're feeling that, you're not alone. And although you can't control inflation or the markets, health care costs, or the economy in general, there are steps you can take to regain a sense of control.

For more information, visit Schwab.com/retirement for a wide range of resources and help.

Disclosures

The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.

Investing involves risk, including loss of principal.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

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