Asset Decumulation or Asset Preservation? What Guides Retirement Spending?

Asset Decumulation or Asset Preservation? What Guides Retirement Spending?

Volume 447

Pages 12

Executive Summary

The Employee Benefit Research Institute (EBRI) undertook a study examining the extent to which the non-housing assets of certain retirees changed during their first 20 years of retirement (or until death, if earlier).

  • The study relied on income and asset data from the Health and Retirement Study (HRS), the most comprehensive survey of older Americans in the country, and on spending data from the Consumption and Activities Mail Survey (CAMS), a supplement to HRS. All numbers are measured in 2015 dollars. The study shows that retirees generally exhibit very slow decumulation of assets. 
  • More specifically, within the first 18 years of retirement, individuals with less than $200,000 in non-housing assets immediately before retirement had spent down (at the median) about one-quarter of their assets; those with between $200,000 and $500,000 immediately before retirement had spent down 27.2 percent. Retirees with at least $500,000 immediately before retirement had spent down only 11.8 percent within the first 20 years of retirement at the median. 
  • While some retirees do spend down most of their assets in the first eighteen years following retirement, about one-third of all sampled retirees had increased their assets over that period.
  • Pensioners were much less likely to have spent down their assets than non-pensioners. During the first 18 years of retirement, the median non-housing assets of pensioners (who started retirement with much higher levels of assets) had gone down only 4 percent, compared to 34 percent for non-pensioners.
     
  • The median ratio of household spending to household income for retirees of all ages hovered around one, inching slowly upward with age. This suggests that majority of retirees had limited their spending to their regular flow of income and had avoided drawing down assets, which explains why pensioners, who had higher levels of regular income, were able to avoid asset drawdowns better than others.

EBRI Issue Brief

April 3, 2018

Sudipto Banerjee

Financial Wellbeing Retirement

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What Guides hous a H ( lik d gle r r e ouseho r oup e civ s ly um s e ing sc a t ha ula han te a of ld n d ats a ion mod set m m spe a rio. t$2 e or le a m nding e su T 0 a e he t s 0,0 r d h te e ia a $5 )rn 100 p of n w e 00 a or 00 su nd t o ) la lt k a ts $ hous s b a c (l h k ae t24 e of r ouseho a low cee 3,07 n e hold nt yd uc p pof oint 0, oint a ild nc tta ion o he spe om td 27 ow ir ur .2 p e nding sn how ing a ta a rd rre e t ting tr he he . c d e e It n couple nt o fin ob a fa ss spe c d e serv e td r op t tn s le a hd a b a c t ov t io d om ft hous p ow .n p e e . p op n r A a e er s F le r hold e e iod d tm igur ir t e ight o s, of m te the e 19 he 4 show nt b 92 e a q sa ss w ue -v e ill ings, st 2014) ting s, t m ionn ehe td o t ia a h ................................ spe ir m is ne e in t ha d ha nd ia s q he s n r db ow ui e fir ate te n th io st n d sent of tiff w ee o spe inc r e y ra nt eom nding ndo a ............... rim s. e m p fr So, liltom y c o atin to ion 7 s was written with assistance from the Institute’s research and editorial staffs. Any views expressed in this report are If the reluctance to spend down assets is due to the fear of running out of money at the end of life, then should people Retirement Spending? inc t one t w he his he om ir n it g of a re oup ss t he rce eom tm s, b a tw a s w eins o s t utspouse e o v ll ae , ne rr e ry e c rte c e ir s. Sinc lose ss lu ee c as d tra ytn ot id t e ools a one t20 not o spe 01 for spe nd , nd Casu nd A ll a d MS p ow d p gow or e h n th a g tn th s b rfo oup ere “ e r ep s, slow e ir n conduc rt inc ia re ss e ipa e s a tly s a l.” s t inc t s q ehe d hin uic e yv g see e k r hi ly y k g a t he w ts r o o re m y fo te ia rra n e r old a m s, w gee e nt rtit he rm h 2015 eir tod ir a eess els s. So, e b w ts in eould ing for r e tg he t e ir th n e la e e m rtm a e elly nt st aj . or rp ound rit eyd ic of tof . t w hose ith life of tim the e a pu etns hor ion inc , and osh mo e uld spenot nd d bow e an th scribe eird a tss o etthe s m off oric ee fr rs, t eely rus ? Thi tees se s, or ot ems li her k e spon a resor ason s of abE le B R pI r, ed Eic mtp ion b loyeut e Bis e ne nofit t Figure 2A shows the percentage of retirees in Group A that had a given proportion of their starting assets (assets in the So, Figur wehil 2A e , a Psi eg rc nif ent ica ag nt e nu of m Re bteir re of d H reouseho tirees ha lds d w spe ith A G nt miv ost en P of rtop heor ir ta ion o ssets f St wit ahi rting n thA es fir sets st t(w ass o e dtes in fir cades sof t t w reo tiryeem ares o nt— f By Sudipto Banerjee, Employee Benefit Research Institute a re vta irila ee bs, spe le datnding a. tracks their income very closely. Because income does not include drawdowns from tax-advantaged Research Institute-Education and Research Fund (EBRI-ERF), or their staffs. Neither EBRI nor EBRI-ERF lobbies or supported by the data. first two years of retirement) left at different points in retirement. By the third to fourth year of retirement one-in-five April 3, 2018 • No. 447 many har de not tire. mIe nde nt)e Re d, m ab aout ining one at -D iniff -te hr re en e tr P et oint irees in Re s, irresp tire ec m tiv ent e of (for the hous ir lev ee hold l of s s w tait rth p ingr e arss eteir te s, h meant d a non ctua -hous lly con ing tin aue sse dt s Change in Non-Housing Assets of Those Who Started Retirement With Assets at Least $500,000 (IRAs or 401(k)s) accounts, this means the majority of retirees limit their spending tth o incth ome that excludes tax- takes positions on specific policy proposals. EBRI invites comment on this research. retirees in this group had less than 20 percent of their starting assets left. By the 17 -18 year of retirement, more A to ll num growb tle e he rss s ir h ta ha ass ve n $200 e b ts in een rkm e )t e ................................ ira esm ur ee nt d. in 201 5 dollar................................ s. ....................................................................... 8 References Figure 3 shows how the median non-housing assets changed for retirees with and without pension income in the two advantaged account drawdowns. Figure 1C shows how the assets changed for Group C – those entering retirement with at least $500,000 in non- than one-in-three (35.1 percent) retirees in this group had less than 20 percent of their starting assets left. Given that C In op ty rr o ig duc ht In tion form ation: This report is copyrighted by the Employee Benefit Research Institute (EBRI). It may be “ dW echa adte D s a etft ee rm r r ine etis E rem nd ent -of . -Fi Lif rst e , Ap ss ee ns tsione ? A rRe s s tr ta or spe tedc trie vte ir e Vi m ee wnt ,” w in D ith mu . Wis ce h hig , ed., heIrns leight vels of s in t ahe sse E ts. I conomi n the c s of firstA tg wing o years, housing assets -- in the 20 years after retirement. The asset decumulation rate was even slower for this group. The the starting assets of this group were very low (median of $31,740), this means a significant number of retirees (Group Figure 2B, Percentage of Retired Households with A Given Proportion of Starting Assets (assets in first two years of used without permission but citation of the source is required. One the m of ed the ian non assum -hous ptions ing und asse et rs for lying p m ea ns ny ione mod rs eals nd usnon ed - to p em ns eione asurre s w ree tir re e m $21 en9,12 t inco 0 a me n da d $e 68 qua ,500 cy r is t espe hac t triv ee tir lye. eA s w fteill r 17- (Chicago, University of Chicago Press, 2017), 127-157. (with S. Venti and D. Wise). th th non-housing asset median for retirees in this group was $857,450 in the first two years of retirement. After 19-20 years A constitutes about two-thirds of the entire sample) had very few assets left by the 17 -18 year of their retirement. retirement) Remaining at Different Points in Retirement (for households with preretirement non-housing Change In Non-Housing Assets After Retirement spe 18 As y nd es ar de s of ow tn th D retiee re irm c ae cu nt cu, mu m the ula tm elat d ed aia ss ion n non ets to o -hous fun rd As ing theair ss s re ee tts f irt eor m Pr epnt ens e ne ione s ede s. rs w r Wv hil aa s $ et t21 his ion 0,99 ma? 1 y W – m a a kd eh r op sense a otf a G in t bout u he ide 4 p orye , rd cs o ent pe . op le th th of retirement, the median dropped to $756,300 – an 11.8 percent drop. So, the group with the highest level of assets On the other hand, by the end of the 17 -18 year, 35.1 percent of retirees in this group had more than 100 percent of Recomm ass en ed ts b ede Ci twtatio een $200 n: Sudip k and to B $a 50 ne 0k rj) e e ................................ , “Asset Decumulation o ................................ r Asset Preservation? ................................ What Guides Retirem ............ ent 9 Soc Theie EtB yRI of st Audy ctuar tie ras. “ cks t The he D ch ea cis nge ion to Re in nont-ir hous e and ing Pa ost ss- eRe ts f tior re m thr ent ee Fi dn iff ae nrceia nt l S gtrroup ateg s of ies: A ret ir Re ee ps w ort ho on e Ent ight ere Fo d rce us tir e Gm roeups” nt actually behave like this? Re had the ti r low eeme st ratn e of t aSp sset e spe n nd din dowg n. ? their starting assets left. That means more than one-in-three retirees in this group had grown their assets throughout Spending?” EBRI Issue Brief, no. 447 (Employee Benefit Research Institute, April 3, 2018). In comparison, during the same period, median non-housing assets of retirees without pensions dropped from $68,500 w (20 ith d 13)iff erent levels of non-housing assets. The asset levels used to distinguish between the three groups are the Figure 2C, Percentage of Retired Households with A Given Proportion of Starting Assets (assets in first two years of the first two decades of their retirement. This is in sharp contrast with the predictions of models used to measure By Su a There to ss$4 ets la 5,00 adip re s0 t seve t ob –o a serv Ba rd arl r op ne ed e a of rjee b sons ea for b, out e E t o the mplo e 34 xpe se pc e hous tye r cte ha e nt e Ben thold . m any s e e fnt rit ee tir Res re ed e s d re ea to irrch I e not me b nt ns e.ha titut ve in w e ays consistent with the assumption of asset Report a re vta iril ea mbil enit t)y Re : Thi ma s r inieng por att is D iff avearil ea nt b le P oint on s i the n Re inte tirrne em t e ant t w (w for w .e hous bri.or ehold g s with preretirement non-housing assets retirement security. Society of Actuaries. “Post-Retirement Experiences of Individuals Retired for 15 Years or More: decumulation. For example, retirees face several risks - uncertain life span, uncertain medical expenses, uncertain of at least $500k) ...................................................................................................................................... 9 So, p ?e nsG ione roup rs a Ar: er e m tiu re ch le es w ss it h likperly e- r te o tir spe em nd end t ow non n th -hous eir ing asse atss s. Thi ets le s su ss g tha gen $200 sts a b,0 et00 ter explanation for such asset- market returns - that might cause many to spend their retirement assets more slowly. In addition, throughout their A Report on Twelve Focus Groups and Fifteen In-depth Interviews in the United States and Canada” (2015) ? Group B: retirees with pre-retirement non-housing assets between $200,000 and $500,000 preserving behavior is that people spend the A mT one y A tha t c G om L es in a A Ns a C reE gula r income flow (such as a pension or Social working lives, many people develop a saving habit. Is it possible to suddenly change or reverse such a habit? How Figure 3, Median Non-Housing Assets Before and After Retirement for Households With and Without Pension ? Group C: retirees with pre-retirement non-housing assets at least $500,000 in assets Table of Contents Security income), and try to preserve their assets for uncertainties or bequest. Because pensioners have more regular easily can people adjust to decreasing account balances after they have focused on increasing their balances for most Income .................................................................................................................................................. 10 Introduction .............................................................................................................................................. 4 income than non-pensioners, they are able to stick to such behavior more closely. of their lives? The Employee Benefit Research Institute (EBRI) undertook a study examining the extent to which the non-housing Definition of Retirement: A primary worker is identified for each household. For couples, the spouse with higher Figure 4, Median Ratio of Household Spending to Household Income from 2001 - 2013, By Age Group...................... 11 a Soc sse ia ts of l Seccur erit ty a in earrenin tire ge s is s c ha the nge ass digne during d prtim hea irr y fir w stor 20 ke ry e aa s he rs of /she ret iha rem s hi ent ghe (orr a unt veril d age ea lif th, etim if e ea e rlie arr n)ings. . The Se stlf ud -ry e p re or lie tedd on Data ......................................................................................................................................................... 4 This study reviews data reflecting how retirees actually use their assets after retirement. Understanding how retirees income and asset data from the Health and Retirement Study (HRS), the most comprehensive survey of older retirement (month and year) for the primary worker in 2014 (latest survey) is used as the retirement (month and year) make such save-or-spend decisions is crucial to measuring retirement income adequacy and to developing products and Change In Non-Housing Assets After Retirement.......................................................................................... 5 for Am e the ric ahous ns in t ehold he c . oun try, and on spending data from the Consumption and Activities Mail Survey (CAMS), a advice to help retirees manage their retirement assets better. supplement to HRS. All numbers are measured in 2015 dollars. Change in Non-Housing Assets of Those Who Started Retirement With Less Than $200,000 ........................... 5 Definition of Non-Housing Assets: Non-housing assets include any real estate other than primary residence; net In 2015, the Society of Actuaries (SOA) interviewed a group of retirees who had been retired for at least 15 years and value ? of The vehicst leudy show s owned; s t indi hav tidua retirl r ee es g tireem ne en ra tlly ac e coun xhibtit s ( vIeRA ry ssl ), ow st oc de kcs a um nd ulam tion o utuaf a l fun ssd es, c ts. hecking, savings and money Change in Non-Housing Assets of Those Who Started Retirement With Assets Between $200,000 and had investable assets between $50,000 and $350,000. They were asked several questions about how they managed market accounts, certificates of deposit (CDs), government savings bonds, Treasury bills, bonds and bond funds; and $500,000 .................................................................................................................................................. 6 their finances. The study concluded, “A key goal of almost all focus group retirees is to maintain or increase their asset ? More specifically, within the first 18 years of retirement, individuals with less than $200,000 in non-housing any other source of wealth minus all debt (such as consumer loans). level … In general, those who have been able to maintain their asset levels have done so through significant cuts in assets immediately before retirement had spent down (at the median) about one-quarter of their assets; those Change in Non-Housing Assets of Those Who Started Retirement With Assets at Least $500,000 .................... 7 spending.” Another focus group study conducted by SOA in 2013 yielded similar conclusions. Of course, these with between $200,000 and $500,000 immediately before retirement had spent down 27.2 percent. Retirees Non-housing assets do not include assets in an employer-provided retirement plan such as a 401(k), which could be a Discussion ................................................................................................................................................. 7 conclusions were based on only anecdotal evidence, but still the conclusions were striking. with at least $500,000 immediately before retirement had spent down only 11.8 percent within the first 20 significant portion of savings. According to the Survey of Consumer Finances (2016), among families headed by years of retirement at the median. individuals ages 65 and older, 13.8 percent of individual assets were in current-employer’s plans, 11.4 percent of What Percentage of Assets Remain at Different Points in Retirement? Results for Group A Retirees Poterba, Venti, and Wise (2017) used data from the HRS, and analyzed how assets changed in the last two decades of Conclusion individual assets were in previous-employer’s plans and 74.8 percent of their individual assets were in IRA or Keogh ( less than $200,000) .................................................................................................................................. 8 the lives of retirees. Their results showed that for most retirees, the value of assets observed in the year before death ? While some retirees do spend down most of their assets in the first eighteen years following retirement, about Life-cycle theory suggests that workers accumulate assets dur ing their working lives and spend those assets during plans. The sample analyzed for this study is retired and by definition has no assets in current-employer plans. So, the were similar to the value of assets observed when they were first included in the survey (up to 20 years prior). In the one-third of all sampled retirees had increased their assets over that period. What Percentage of Assets Remain at Different Points in Retirement? Results for Group B Retirees retirement. Most retirement models and much of the advice provided to retirees are based on this assumption. While sample should have a higher proportion of individual assets in IRA or Keogh plans. However, some of the individual HRS cohort (born between 1931 and 1941), among those with assets between $1- $50,000 in the last year before (between $200,000 and $500,000) ............................................................................................................. 8 there is enough evidence that workers accumulate assets during their working years, there is much less evidence to assets will be missing for the analyzed sample, and the decumulation of those assets will not be captured in the study. Discussion ? Pensioners were much less likely to have spent down their assets than non-pensioners. During the first 18 death, 81 percent had assets less than $100,000 in the first year of observation. show that retirees systematically spend down their accumulated assets during retirement. Do retirees want to spend What Percentage of Assets Remain at Different Points in Retirement? Results for Group C Retirees Why are yre ea tirrs of ees not reti rspe eme nding nt, the dow me n th dian non eir ass-e hous ts? There ing assaertes of prob pe ans bly ione a nu rs (who mber of sta re rtaesd ons. Fir retirem ste, nt the writ eh mu are tche h hig her Change in Non-Housing Assets of Those Who Started Retirement With Less Than $200,000 down their assets or do they simply want to hold on to their assets as a financial cushion? What Percentage of Assets Remain at Different Poi nts in Retirement? Results for Group B Retirees (at least $500,000) .................................................................................................................................... 8 Instead of looking at the last few years of life, the Employee Benefit Research Institute (EBRI) study looks at how uncertainle tie ve s. P ls of eop ass lee d ts) on’ ha t kdnow gone how dow long n o nly the y 4 p areer cgeoing nt, c o to mliv pa er e or d how to 34 long per cte he nty for ha v non e to -pfun ensdione therir s. r etirement from (between $200,000 and $500,000) Figure 1A shows how non-housing assets changed for Group A – those entering retirement with less than $200,000 in retirees’ assets change in the years immediately following their retirement. In addition to asset changes, the study also these assets. Then there are uncertain medical expenses that could be catastrophic if someone has to stay in a long- This EBRI study shows that the majority of retirees do not spend down their assets in the first two decades of their Do Retirees With Pension Income Spend Down Their Assets Faster than Others? ........................................... 9 non- ? hous The ing a m se sets dian --r a ov tio erof the hous 18e y ho eald r p spe eriod nding aft etr o rhous etiree m hold ent. inc Firom st, e the for p r re et rie rteir ee s of men atll a , non ges h -hous ove ing reda a sset round me one dian, for compares income and spending of retirees of different ages to better understand how retirees make spending Fi teg rm ur e c a2B re sh fac ow ilits y tfo he r a p e prrcolon entaggeed of perre iod tire . e Of cour s in Grse, oup if p B teha optle ha ha d v ae g tiv o eself n p-rins opor urteion ag a of intst he tir he st se arunc ting ea rtss aint ets (a ies, t ssets hey n in ee the d retirement. This behavior is not limited to those with lower levels assets. In fact, those with the highest level of assets inching slowly upward with age. This suggests that majority of retire thes ha th d limited their spending to their this group was only $29,975. The mean was $48,552. In the first four years of retirement, the mean increased (to a decisions. t fir o shold t two on ye to arts of heir ra ess tire etm s. Se ent) c ond left , asom t diff ee of rent the pse oina ts in r ssets a etr iree m like ent ly. tB o yb tehe p a17 ssed -18 on tyo ea the r of ir r he etir irs a ems b ente, q1 ue 5.7 p sts. eB rc ut e,nt w of hat Do Retirees Limit Their Spending to Their Income? .................................................................................... 10 show the lowest rates of spending down. th th large parrte d gue ula r to flow IRA of rolin lov com ers) e , ab nd ut h the ad m aveoid diaed n rd erm aw ain ing edd m ow orn e aor sset less s, w the hic sha m expla e. Thi ins w s ishy unde pens rstione anda rs, w ble ho becha aus d ehighe in r p re etrir ce ee nt s in t age hi of s g acrtoup ual b ha eq due lest ss t s a ha ren 2 pla 0 p nne erdc e vnt s. a of cctide heint r st al i ars a ting n o ap ss ee n q ts le uefst t. ion. On tThi he rot d, he anot r ha he nd, r p b oss y tible he 17 rea- son for 18 ye a th r,is Do Retirees Limit Their Spending to Their Income? Conclusion lev ................................ els of regular income, ................................ were able to avoid ass ................................ et drawdowns better ................................ than others. .............. 11 Group A, IRA rollovers were generally limited to people with higher assets and with access to employer plans. sl a Anot ls ow o, he a ha ss r v e 36 ing t .8 p degcua u em rrca ula en nt te t ion r of ed rinc eattir om ee e could e s in t for b his lif ee la ,g r su coup k cof h ha a fin s a d a nc m pe ior a ns l so e io tha n p,his n 100 p doe tics an’ tion, te m rca e or k ne tin oth r of ett irhe eeeir rs w s m toa or rrdte s, p ing like e aop ly ss e t le o ts le d spe on’ ftnd . t Th know da ow t m n th w eha ans etir i, s a Data Definition of Household Income: Income includes wages and labor earnings; capital earnings; defined benefit assets either. To the contrary, of all the subgroups studied, pensioners have the lowest asset spend-down rates. This si sam feil a ra r tte o for Group spe nding A reti rd eow es, m n th or ee ir ta hss an o ets. So, ne-in -tthe hre ye a G rer ou err pi ng B ron etirte he es si ha de d of grow caut n th ion. eirFi ana sslly et, s t so hm roug e of hout it c ould the fir be s tj us twto a References .............................................................................................................................................. 12 Ov er the 18-year period, there was a very small drop in the median assets of this group, from $31,740 (after 1- 2 years p The ensinc ions om ; a ennu and itie ass s; Soc et da ia ta l S for ec ur this ity sD tudy c isabilia ty m Iens fru om ran tche e; Soc Hea ia lth l Se and curRe ityt ir re etm ire em nte St ntudy bene (H fit RS) s; une , the m m ploy ostm ce ont m prehensive su b de eg ha ca gd e ve st ior s of s atl im ha the tp if e ird tr he im et ieg rnt e oa m . l is t e Ant fte . o r b auil void ding spe anding saving dow hab n a it t ss hr eou ts, gp hout ens ione their rs a wor rek b ing estliv su eis, p ted etop o d le o fin sod . Iit n o cha the lle rnging word s, i to f shift of retirement) to $24,000 (after 17 - 18 years of retirement). This was only a 24.4 percent drop. Such a rate of asset compensation; and government transfers and other sources of income such as alimony, lump sums from insurance, survey of older Americans in the country. Every two years, beginning in 1992, HRS has surveyed a nationally r etirees seek to limit their spending to their regular flow of income (such as pension, Social Security income, or other into spending mode. They continue to build up their assets or hold on to their assets as long as possible. decumulation was definitely much lower than what has been traditionally assumed by most retirement models. But r pe ep ns reions sent , aor tiv inh e se ar m itp ale nc e of , or U. S. any hous thing ehold else s w . In itc h ind omeiv m idua easu lsr ov e is e rus ag ee d 50 from on the top RA ics su NDc H h R aS s he dataal tfil h, ea a ssets nd d, oe ins not come , inacn lu dd e W Figur hat P ee src entage of Assets Remain at Different Points in Retirement? Results for Group C Retirees annuity income), then pensioners are indeed best suited to avoid asset decumulation, as they have more regular intuitively, such behavior was not confounding. These households had very few assets and they faced a lot of D dis o tt rhe ibuse tions resu frlt om s m Ie RA an no s, 401 one (k) is s, b runn roking erag out e a c of coun mone ts, or s y in raevtings ireme an cc t? ount No. s.Som e retirees are running out of money in labor-force status in detail. The initial sample consisted of individuals born between 1931?1941 and their spouses, (at least $500,000) income than others. Figure 1A, Mean and Median Non-Housing Assets Before and After Retirement for Households with Non-Housing Assets uncertainties. So, it was not “irrational” for them to have held on to their assets as long as possible. r re et gir ae rd mle ess nt of (as sh their ow bn in irth ye sec ar t.ion Young 3 bee low r cohor ). At tts h hea sa vem bee e tin a med , d ins edt ein follow ad of spe ing nding yea rd s. ow Hn, RS a is la sponsor rge num eb de b r yof the re tN ira eteion s aa rl e Change in Non-Housing Assets of Those Who Started Retirement With Assets Between $200,000 Figure 2C le sh ss ow tha sn $200 the pek r c(e w nt he ag n la e of st rob etir serv ees in ed b Gerfor oup e r Ce ttir he am t ha ent d) a ................................ given proportion of the ................................ ir starting assets (as.............. sets in the 6 Definition of Household Spending: Household spending includes spending in 36 categories broadly measuring c W ont hein n house uing to hold acc u inc mom ulate e of asrse ettir s t ee hr s ois ugho com ut pa rre etd ir e to mhous ent. ehold spending, the study finds that majority of households Institute on Aging (NIA) and the Social Security Administration (SSA) and is administered by the Institute for Social th th a firnd st t$5 wo 00 ye,0 ars of 00 retirement) left at different points in retirement. By the 17 -18 year of retirement, about one-in- It is important to note that the value of non-housing assets may go down even when retirees are not spending down home and home-related spending, health, food, transportation, clothing, entertainment, and any other spending. Total indeed limit their spending to their income. Research (ISR) at the University of Michigan. Figure 1B, Mean and Median Non-Housing Assets Before and After Retirement for Households with Non-Housing Assets e the ight se (a 12 ss.2 p ets. For erce nt exa ) rm etp irle e, es in t a yeahis r of gne roup ga tha ive d rle etss ur ns tha c n 2 oul0 p d aels rc o ernt esu of lt tin low heir ste arr ta ing ssea ts. B ssets ut le sift nc . e So, the e vdean a ta m shong ow m thu ose ch Figure 1B shows how the assets changed for Group B – those entering retirement with non-housing assets of at least spending is calculated by the author using CAMS data. EBRI Issue Brief is registered in the U.S. Patent and Trademark Office. ISSN: 0887 ?137X/90 0887 ?137X/90 $ .50+.50 between $200k and $500k (when last observed before retirement) .............................................................. 6 who started retirement with a sizable amount of assets, some ended up spending most of their assets within the first lower drops in assets than predicted by economic theories or retirement models, this is not a particular concern. In the I $2 f r00 et,00 iree0 b s aut re le de ss te trh m ain $50 ned to 0,00 pre0 serv -- e in t the he ir 18 ass yeeta s a rs a nd ftnot er r e to tirspe eme nd nt. the The m tdrow ends n, twe hisr ec rveeartye s siim mila por r tto a nt tr e im nds plic see ations n for -- The spending data came from the Consumption and Activities Mail Survey (CAMS). CAMS, which was initiated in 2001, © 2018, Employee Benefit Research Institute ?Education and Research Fund. All rights reserved. case of negative returns, the data would suggest people are spending down even less. But, if the assets appreciate and G rarnging oup A . frIon th m te he fir tst yp e tw of o y re etairre s of ment re tp irre od muc ent ts off , thee non red -thous o how ing rea tss ireem t e m nt e dpia re np for are d Gne roup ss is B a w ss as $33 essed3,94 . How 0. A evft ere, r if su 13-14 ch as a supplement to the HRS. Every year following the main HRS survey, the CAMS questionnaire has been sent to a e e e e e e e e e e eb b b b b b b b b b br r r r r r r r r r ri. i. i. i. i. i. i. i. i. i. i.o o o o o o o o o o or r r r r r r r r r rg g g g g g g g g g g IIIIIIIIIIIs s s s s s s s s s ss s s s s s s s s s su u u u u u u u u u ue e e e e e e e e e e B B B B B B B B B B Br r r r r r r r r r rief ief ief ief ief ief ief ief ief ief ief • • • • • • • • • • • A A A A A A A A A A Ap p p p p p p p p p pr r r r r r r r r r ril il il il il il il il il il il 3 3 3 3 3 3 3 3 3 3 3,,,,,,,,,,, 2 2 2 2 2 2 2 2 2 2 20 0 0 0 0 0 0 0 0 0 01 1 1 1 1 1 1 1 1 1 18 8 8 8 8 8 8 8 8 8 8 • • • • • • • • • • • N N N N N N N N N N No o o o o o o o o o o........... 4 4 4 4 4 4 4 4 4 4 44 4 4 4 4 4 4 4 4 4 47 7 7 7 7 7 7 7 7 7 7 12 8 5 9 10 3 7 2 11 6 4 A research report from the EBRI Education and Research Fund © 2018 Employee Benefit Research Institute