Boston College: Post-Retirement Consumption Important Factor to Consider

So many studies conclude that retirees are falling short in saving for their retirement. NAIPC recently reported on a study from Interest.com that revealed retirees in 49 out of 50 states have insufficient retirement income, as well as an article that appeared in The Economist that warned about the looming retirement crisis.

But it’s not all bad news. The economy is on the right path, which has led to very positive results for investors as well as 401(k) savers. And a recent study conducted by the Center for Retirement Research at Boston College revealed that many of the studies assessing whether retirees have adequate income fail to accurately account for post-retirement consumption. Many of these studies operate on the assumption that consumption decreases as children leave the home, but that’s not always the case.

The reality is that retirees who are not willing to sharply reduce their consumption in the retirement years simply will have to save more during their working years or postpone retirement to build upon existing savings.

To read the full study, click here.