"Married 65-year-olds with at least $100,000 in financial assets withdrew an average of 2.1% of their savings annually-that is, nearly half the usual spending rate of retirees, according to the research David Blanchett, head of retirement research at PGIM DC Solutions, an affiliate of Prudential Financial and coauthor of the study, told that since 1926, retirees have been able to spend 4% of their savings per annum without risking running out of money in the last 30 years of their lives."
"But now, the prospect of living to upwards of 95 years old is becoming an increasing likely reality for older people-and you can bet the cost of housing, health care, bills, and food is going to go up in that time. It's why instead of splashing out on those golden years with trips around the world on a cruise, spending below one's means has become prevalent especially among wealthier retirees, the survey concluded."
A large survey of roughly 20,000 people over age 50 finds many retirees living well below their means. Married 65-year-olds with at least $100,000 in assets withdrew about 2.1% of savings annually, nearly half the traditional 4% withdrawal benchmark cited since 1926. Anticipated longevity into the mid-90s and expected increases in housing, health care, bills, and food costs are driving more conservative spending. The phenomenon is termed the retirement consumption puzzle. Many retirees report feeling unprepared for retirement income reductions and continue to save rather than increase consumption.
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