New report sheds light on retirement security and financial decision making

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TEXPERS STAFF REPORT

The Consumer Financial Protection Bureau issued a new report, Retirement Security and Financial Decision Making, that finds a growing number of retirees are not experiencing the expected gradual reduction in spending after they retire.

The report, published by the Consumer Financial Protection Bureau, finds that nearly half of Americans who retired between 1992 and 2014 were unable to keep the same spending level for five years following retirement. The Bureau’s findings indicate that certain financial decisions may enhance or diminish retirees’ ability to maintain the same level of spending, according to an email from NIRS announcing the webinar. For example, for homeowners, entering retirement without mortgage debt, for those with a pension, choosing a monthly annuity rather than in a lump-sum payout, are positively associated with retirees’ ability to maintain the same spending level for five years.

The study helps identify ways to protect retirees from overspending their savings in early retirement.

> REPORT:  Access a copy of the research brief.

Key Findings

• The study found that about half of people who retired between 1992 and 2014 had income, savings, and/or non-housing assets to maintain the same spending level for five consecutive years after retiring.  
• Bureau found that the ability to maintain the same spending level in the first five years in retirement was associated with large spending cuts in later years. 

The Consumer Protection Bureau is a federal agency responsible for consumer protection in the financial sector.