Following nearly two years of COVID-19 in the U.S., it’s no surprise that mental health concerns are on the rise. In fact, a recent poll found that nine in 10 therapists say the number of clients seeking their services has increased, and one in three have waiting lists over three months’ long just for an initial appointment. And while there have been several contributors over the past 24 months—like social isolation, drastic changes in routine, or loss of a loved one—one perhaps overlooked factor fueling this mental health crisis is financial stress.

According to MetLife’s 19th Annual Employee Benefit Trends Study (EBTS), poor financial health is a top driver of poor mental health, with 86% of working Americans saying finances are a top source of stress for them both now and in the future. This makes sense when you consider that, amid stock market volatility, job loss, rising inflation, and more, many Americans are not only struggling in the short term, but are also behind on their long-term financial goals, like saving for retirement.  Today, more than half (58%) of working Americans either haven’t started or are behind in their retirement savings and for those who are retired, four in 10 express anxiety about their money running out entirely, according to MetLife’s 2022 Paycheck or Pot of Gold Study℠.

That’s why, as many look to improve their mental health this year, educating yourself around the realities of retirement can be critical to curbing financial anxieties and gaining overall peace of mind. As such, here are three of the most common myths around retirement benefits—and the facts that can help reduce your financial stress:

1. Myth: The best way to distribute your retirement savings is as a lump sum.

Fact: The decision about what to do with the money from your 401(k) at retirement is a big one, and shouldn’t be taken lightly—it will literally affect you for the rest of your life. Taking all of the money as a lump sum may be tempting, but there can be significant drawbacks. Consider that one in three retirees (34%) who took a lump sum from their employer-sponsored defined contribution (DC) plan depleted their money in an average of five years, on average. 

Many individuals who take lump sums from their retirement plans have depleted their money too quickly relative to their life expectancy, potentially leaving them to fund a significant portion of their retirement years with no income other than Social Security, MetLife’s Paycheck or Pot of Gold Study found, so it’s important to consider all of your options to determine which is right for you.

2. Myth: It’s easy to lose control of my money if I’m not receiving my retirement savings all at once.

Fact: Contrary to popular belief, solutions like income annuities may allow you more financial control. They can provide you with a guaranteed, steady stream of income in retirement, no matter how long you live. By selecting an income annuity, you are essentially creating a guaranteed stream of monthly payments, and the predictable cash flow provided by a lifetime income product makes it easy to turn your assets into a steady “retirement paycheck.” This presents a viable alternative to attempting to control one large lump sum of money throughout retirement.

In addition, annuities do not have to be an “all or nothing” proposition. By using partial annuitization, you can create a guaranteed layer of income with a portion of your savings and keep some assets in the plan to continue to grow your savings or for unexpected expenses.

3. Myth: My employer only offers one type of distribution option.

Fact: More and more employers are now offering non-lump sum solutions as distribution options for DC plans. And while some fear these options are overly complex and confusing, they’re actually much simpler than one might think. There are no investment decisions to be made with income annuities, for example, making them an all-in-one solution for employees looking for simplicity when planning their financial futures. By taking advantage of different offerings, you can have more confidence, having taken steps to ensure your savings last. 

In these unpredictable times, thinking about your financial future can be anxiety-producing. And while retirement is just one piece of the financial wellness puzzle, understanding which retirement options work best for you, and knowing how to leverage them, can help provide comfort in knowing that your savings will be protected, even in the face of future uncertainty.