How Household Spending Changes in Retirement

How Household Spending Changes in Retirement

Volume 1148

Pages

EBRI Press Release

PDFTextVersion is null

2  News from EBRI Among the major findings in the EBRI report: ? In the first two years of retirement, median household spending dropped by 5.5 percent from preretirement spending levels, and by 12.5 percent by the fourth year of retirement. th 1100 13 St. NW ? Suite 878 ? Washington, DC 20005 But the spending reduction slowed down after the fourth year. (202) 659-0670 ? www.ebri.org ? Fax: (202) 775-6312 ? In the first two years of retirement, 2 in 5 households (39.3 percent) spent less than 80 percent of their preretirement spending. By the sixth year of retirement, a majority (53.1 percent) of households did so. For Immediate Release: Nov. 19, 2015 Contact: Stephen Blakely, EBRI, 202/775-6341, blakely@ebri.org ? In the first two years of retirement, 28.0 percent of households spent more than 120 Sudipto Banerjee, EBRI (author), 202/775-6306, banerjee@ebri.org percent of their preretirement spending. By the sixth year of retirement 23.4 percent of households still did so. New Research from EBRI: ? The median household has a home mortgage payment before retirement but none after retirement, indicating paying off mortgage could be a factor in the timing of retirement. How Household Spending Changes in Retirement The full report, “Change in Household Spending After Retirement: Results from a WASHINGTON—On average, households spend less once they retire—but not all households, Longitudinal Sample,” is published in the November 2015 EBRI Issue Brief and online at and not in the same ways. www.ebri.org EBRI’s publications can also be accessed through mobile device apps, available in the Apple New research from the nonpartisan Employee Benefit Research Institute (EBRI) finds that while store for Apple devices and Google Play for Android devices. average spending in retirement falls in the first two years in retirement, nearly half (45.9 percent) of retired households actually spent more than they did just before retirement. That declines over The Employee Benefit Research Institute is a private, nonpartisan, nonprofit research institute time, and by the sixth year of retirement, just a third (33.4 percent) spend more than they did based in Washington, DC, that focuses on health, savings, retirement, and economic security preretirement. issues. EBRI conducts objective research and education to inform plan design and public policy, does not lobby and does not take policy positions. The work of EBRI is made possible by Total Household Spending (in 2013 $s) in the Years “We also found that funding from its m Surroundine gm Re btirement (Mortgag ers and sponsors, which in e Principal NOT Incl clude a broad range of public, private, for- uded) households that spent more in $60,000 profit and nonprofit organizations. For more information go to www.ebri.org or www.asec.org the first two years of retirement were not $50,000 exclusively high-income $40,000 households,” said Sudipto Banerjee, research associate $30,000 at EBRI and author of the report. “Rather, they were $20,000 distributed across all income levels.” $10,000 $- Mean Median EBRI’s analysis examines Pre-Retirement $56,006 $46,452 After 1 ?2 years $51,721 $43,901 how household spending After 3 ?4 years $48,384 $40,651 After 5 ?6 years $47,766 $39,888 changes in the immediate years following retirement by Source: Employee Benefit Research Institute estimates from Consumption Activities and Mail Survey (CAMS), 2005 ?2013 analyzing the spending patterns of a fixed group of households up to six years after they retire. It uses data from the Health and Retirement Study (HRS), which is a survey of a nationally representative sample of U.S. households with individuals over age 50 and is the most comprehensive survey of older Americans in the nation and covers topics such as health, assets, income, and labor-force status in detail. Additional data come from Consumption and Activities Mail Survey (CAMS), which PR 1148 was started in 2001 as a supplement to the HRS and contains detailed household spending EBRI on Twitter: @EBRI or http://twitter.com/EBRI Blog: https://ebriorg.wordpress.com/ EBRI RSS: http://feeds.feedburner.com/EBRI-RSS information.