Why Well-Funded Retirees Still Won't Spend Their Savings

Full analysis

Research from the Employee Benefit Research Institute found that only about 44% of retirees expect to spend all or a meaningful portion of their savings; 33% plan to spend only a small portion, and 22% plan to spend none — or even keep growing their nest egg. The most common reason, cited by roughly 38% of respondents, was saving for an unnamed future cost rather than fear of running out of money outright. Separate data on middle and high asset retired households found that roughly 48% and 42%, respectively, still had at least 80% of their starting assets more than 20 years into retirement — consistent with a Federal Reserve finding that retirees die with nearly twice as much savings as they had at retirement.

Behavioral finance researcher Daniel Crosby, drawing on a University of Michigan Health and Retirement Study and other research, argues the problem is not primarily financial but psychological and behavioral. Retirees spend about 80% of income from guaranteed sources like Social Security and pensions, but less than half of what they could from investment portfolios — same money, very different emotional permission. Crosby identifies four root causes: identity (spending feels like breaking a lifelong rule), competence (a falling balance feels like failure), optionality (spending feels like giving up future choices), and mortality (drawing down a finite pool is a reminder that time is also finite). He suggests five diagnostic questions: What experience are you putting off right now? What specifically are you protecting this money from? If your portfolio never grew another dollar, what would you change about how you live? What would your younger self hope you did with this money? And — what does 'enough' look like now, at this stage of life, rather than when you first set your savings target?