You Can't Take it With You: Why Retirees Spend Just 2.1% of Their Savings (with Brett Blake)
Retirement’s biggest money problem may not be running out. It may be dying with the account still mostly intact.
Many retirees don't spend much of their savings during retirement, with 65-year-old married couples typically spending only about 2.1% of their $500,000 in savings annually. Most of their spending, around 80%, comes from predictable sources like Social Security, pensions, and annuities, while funds in retirement accounts are left largely untouched.
This behavior may be driven by psychological factors, such as the comfort of regular checks versus the perceived loss of withdrawing savings. Despite some debate about whether guaranteed income truly changes spending habits or simply reflects the type of savers, both viewpoints agree that retirees tend to underspend and may leave significant assets unused by the end of life.
The underlying issue is not running out of money, but failing to use savings to enhance life experiences.
The most practical question is not “What return can this portfolio earn?” It is “How much of ordinary life is covered by checks that arrive no matter what?” Social Security averages $2,071 a month for retired workers this year.
The rest is the gap.
A daughter’s final fall choir concert and an 87-year-old father finally taking his adult children to Croatia make the math personal.
If not now, when?
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