“Given that a growing number of retirees are not experiencing the expected gradual reduction in spending after they retire, the study helps identify ways to protect retirees from overspending their savings in early retirement,” the CFPB said.
The report found that 51 percent 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. The bureau also 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 study also showed that the 51 percent of retirees who are able to maintain their same spending level after retiring were more likely to: not have a mortgage or other debt; have a traditional pension taken in monthly payments rather than in a one-time lump-sum, and claim their full or maximum Social Security benefits rather than reduced benefits at a younger age.
In addition, the bureau found that the ability to maintain the same spending level in the first five years in retirement varies significantly by sex, race, marital status, health status, educational attainment and generation.
Other key takeaways from the report included:
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