How does spending change through retirement?

Abstract

How does spending change through retirement?

How important are defined contribution pensions for financing retirement?

“…However, while the composition of spending changes as people age, it is not clear that total spending needs fall. In fact, Crawford, Karjalainen and Sturrock (2022) show that per-person spending in retirement stays on average flat in real terms, rather than declining with age.…”

Challenges for the UK pension system: the case for a pensions review

“…As a result, they might help individuals manage their resources through retirement: for example, all of the income from an inflation-linked annuity could be spent each year in the knowledge that the same level of real-terms spending could be maintained through to the end of life regardless of how long that might be. Evidence suggests that such a flat real profile through retirement -rather than, say, a declining spending profilemight, on average, be appropriate (Crawford, Karjalainen and Sturrock, 2022). A further challenge comes from the fact that decumulation decisions need to be made with respect to what, on average, will be many years of retirement.…”