CFPB Study Highlights Challenges Retirees Face to Meet Expenses in Early Years of Retirement

The CFPB recently released a study titled Retirement Security and Financial Decision-making: Research Brief that examines the expenses and financial resources of retirees for the first five years of retirement for the period between 1992 and 2014.  The study “examined how the ability to maintain the same spending level varies by sex, race, marital status, health status, educational attainment, and generation, as well as financial circumstances and retirement decisions.” The study also concluded that the ability to maintain spending levels in the first five years of retirement was associated with significant cuts in spending in later years.  Study findings include:  

• Nearly half of all retirees did not have the ability to maintain the same spending level for five years after retiring;
• Two-thirds of younger retirees did not have the ability to maintain the same spending level for five years after retiring;
• Retirees who were unable to maintain the same spending level after retiring reported large reductions in spending as they aged; and
• Decisions about debts, pensions, and Social Security are related to the ability to maintain the same spending level after retiring.

Comprehensive findings, methodology and detailed tables are included in the report.