Retirees Spend More with Lifetime Income
New research reveals why lifetime income leads to higher spending — and better retirement security
As retirees increasingly rely on defined contribution savings plans rather than traditional pensions, the challenge of turning savings into sustainable income has never been greater. In new research, David Blanchett, PhD, CFA, CFP®, and Michael Finke, PhD, CFP®, examine how the structure of wealth influences spending behavior in retirement. Their findings show that retirees spend significantly more from sources framed as lifetime income — such as Social Security, pensions, and annuities — than from traditional savings or investment accounts, leading to improved well-being and reduced financial anxiety.
Retirees spend a much higher percentage of their lifetime income than they do from savings — creating a powerful case for guaranteed income strategies.
Drawing on data from the Health and Retirement Study, Blanchett and Finke confirm that mental accounting plays a powerful role in retirement decisions. Retirees tend to preserve or under-spend from investment assets while more freely spending guaranteed income streams. The research suggests that strategies like annuitization, lifetime income illustrations, or automatic withdrawal programs can help retirees reframe savings as spendable income — ultimately enhancing retirement outcomes and helping individuals live more comfortably throughout retirement.
Explore how lifetime income can unlock better retirement outcomes.