Many of us are worried about retiring with enough money to last the rest of our lives. A new study by researchers at Texas Tech University, however, suggests you’re probably going to be okay.
The researchers analyzed the retirement savings and spending habits of 835 retirees between the ages of 65 and 70. They found that those in the third, fourth, or fifth quintiles of the study, based on assets, were spending 8% less on average than could have been. Those with higher levels of wealth underspent by as much as 46%.
In other words, most retirees with at least the median amount saved for retirement don’t spend as much in retirement as they can. That gap could be because they want to leave money for their heirs or fear unexpected medical bills or the uncertainty of when they’ll die.
You should still, of course, calculate how much you’ll need in retirement, err on the side of caution when saving, and make withdrawals strategically when you’re retired. But maybe this news will also give you a bit more peace of mind.
The Retirement Consumption Gap: Evidence from the HRS | Social Science Research Network via Consumer Reports
Photo by 401 (K) 2013.