16 May 2018

Are you Retirement Saving or Retirement Spending?

A recent survey by the Employee Benefit Research Institute (EBRI) found that people in retirement don’t spend the retirement assets that they have built up as quickly as you would expect.

The survey from the US showed that retirees that started retirement with less than $200,000 in retirement assets, i.e. pensions, shares etc. had spent about 25% of their assets after 18 years of retirement. Retirees with assets starting retirement with between $200,000 and $500,000 spent 27.2%, and finally the people who began with at least $500,000 before retirement had spent just 11.8% after 20 years of retirement.

The survey highlights that in retirement retirees tend reduce their spending to ensure their funds last. It suggests that retirees are more likely to work to a budget and the lack of certainty around a “safe rate” of spending results in a more conservative rate of decumulation of assets. 

Good news for some perhaps but why work all your life and not live your dream retirement.