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Why Do People Spend the Way They Do in Retirement?

| Economic Update, Retirement, Work to Wealth

Retirement Spending

Findings From EBRI’s Spending in Retirement Survey


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The Employee Benefit Research Institute’s (EBRI’s) Spending in Retirement Survey was conducted in September 2020. An online survey, the Spending in Retirement Survey queried 2,000 individuals ages 62 to 75 about their spending habits and their situation at and during retirement. Ninety-seven percent reported being retired; 80 percent reported their spouse/partner being retired. The mean number of years respondents reported being retired was 8.7, with 4 in 10 (39 percent) having been retired 10 years or more. Households were roughly evenly split between high annual household income ($80,000 and higher), middle household income ($40,000 to $79,999), and low household income (less than $40,000). The mean amount of current financial assets reported by respondents was $200,000, with a median of $75,000.

Following are key findings from the survey:

People generally wish they’d saved more: Only 18 percent of those surveyed reported that they had saved more than was needed, while nearly half (46 percent) reported having saved less than they needed in retirement.

Still, most believe they are doing well in retirement: The majority of respondents reported that their standard of living was the same or higher in retirement than when they were working (69 percent). In addition, 6 in 10 (61 percent) respondents felt their spending level was about the right amount for what they could afford.

Most don’t want to spend down all their assets: Just over 4 in 10 (43 percent) respondents reported that they planned to spend down all or a significant portion of their assets in retirement. The rest wanted to spend down a small portion of assets, spend none at all, or grow their assets.

Fear of running out of money is not the primary motivator: When asked about the rationale for not spending down assets in retirement, fear of running out of money (27 percent) was outpaced by saving assets for an unforeseen cost later in retirement (38 percent), feeling that spending down assets is unnecessary (37 percent), wanting to leave as much as possible to heirs (33 percent), and simply feeling better when account balances remain high (31 percent).

Having a retirement nest egg makes people happy: 64 percent of survey respondents agreed that saving as much as they can makes them feel happy and fulfilled.

Priorities change during retirement: Maintaining health and wellness in retirement was by far the most important goal at the time people retired: 81 percent said it was very or extremely important. This became more important as retirement progressed. In contrast, traveling became less important for a quarter of survey respondents.

The reality of retirement differs from retirement expectations: Fewer than 1 in 4 (24 percent) respondents scored their current life in retirement as highly aligned with how they expected or planned for their life in retirement to be.

Nonetheless, satisfaction in retirement is above average: Eight in ten scored their retirement satisfaction as above average, and just over a third of respondents (36 percent) scored their retirement satisfaction as high.

Even so, not everyone fares well in retirement: Those least satisfied with retirement were those with unmanageable or crushing debt: More than 4 in 10 (42 percent) in this category registered below-average satisfaction with retirement. Indeed, those with unmanageable debt scored poorly by almost every measure, including lower life expectancy, less ability to spend within their means, retirement being costlier than expected, finding themselves forced to dip into savings during poor market conditions, and lack of alignment between retirement expectations and reality. Other cohorts who showed signs of strain in retirement include those who are unmarried, those who have fair or poor health, or those with low household income.


“Unforeseen Costs Are the Main Reason Retirees Don’t Want to Spend Down Their Assets,” EBRI Infographic, no. 70 (April 8, 2021)

Lori Lucas, “Why Do People Spend the Way They Do in Retirement? Findings From EBRI’s Spending in Retirement Survey,” EBRI Issue Brief, no. 522 (January 14, 2021)