Evan Simonoff

Research finds retirees spend 80 % of lifetime income, but only 50 % of financial assets.

T IS SAID THAT THE HARDEST PROBLEM IN FINANCE IS MAKING SOMEbody ' s money last for a 30-year retirement when that time span is likely to be characterized by unanticipated twists and turns— in both the financial markets and clients’ lives. Virtually every surprise event— from an extended bear market to a war to a health crisis to a sustained bout of inflation or deflation— may look like an outlier at any given point in time. Yet those things happen.

The endless number of scenarios that could derail a retirement are enough to scare any retiree— and constrain her or his willingness to spend. But there’ s another reality at work.

Most retirees today are spending money mostly out of their own assets( aside from Social Security). That includes monies from 401( k) plans, IRAs, investment portfolios and other savings vehicles. In a paper called“ Retirees Spend Lifetime Income, Not Savings,” published in Financial Planning Review last fall, authors David Blanchett, a managing director and head of retirement research at PGIM, and Michael Finke, a professor of wealth management at the American College of Financial Services, argue that this shift to defined contribution plans inhibits retirees from spending to the degree they might.

Why? Because people see their pensions as a retirement paycheck, not as the equivalent to their life savings, the latter being theirs to nurture, grow and leave to children or another legacy project. The implication is that the current generation of retirees could be spending significantly more, as life cycle consumption-savings theory might suggest.

“ We find that retirees spend far more from lifetime income than other categories of wealth. Approximately 80 % of lifetime income is consumed, on average, versus only approximately half of other available savings and income sources,”

12 | FINANCIAL ADVISOR MAGAZINE | MARCH / APRIL 2026 WWW. FA-MAG. COM