{"id":385599,"date":"2021-12-25T01:24:00","date_gmt":"2021-12-24T22:24:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/encore-how-much-do-retirees-want-to-consume\/"},"modified":"2021-12-25T01:24:00","modified_gmt":"2021-12-24T22:24:00","slug":"encore-how-much-do-retirees-want-to-consume","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/encore-how-much-do-retirees-want-to-consume\/","title":{"rendered":"#Encore: How much do retirees want to consume?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a28a8680d411\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a28a8680d411\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/encore-how-much-do-retirees-want-to-consume\/#It_matters_and_the_answer_depends_on_wealth_health_and_life_expectancy\" >It matters, and the answer depends on wealth, health and life expectancy<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/encore-how-much-do-retirees-want-to-consume\/#Alicia_H_Munnell\" >Alicia H. Munnell<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Encore: How much do retirees want to consume?<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"It_matters_and_the_answer_depends_on_wealth_health_and_life_expectancy\"><\/span>\n  It matters, and the answer depends on wealth, health and life expectancy<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\" role=\"region\" aria-label=\"article body\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000526039\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000526039\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Whether households prefer a constant, increasing, or decreasing path of consumption in retirement has important implications for our understanding of retirement adequacy.\u00a0 <\/p>\n<p> If people want steady consumption, they need more assets at retirement than if they plan to let their consumption decline over time.<\/p>\n<p><strong>Read: <\/strong>Want to be a better investor? Sign up for our How to Invest <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">Series<\/a><\/p>\n<div class=\"paywall\">\n       Economists\u2019 life-cycle model assumes that forward-looking retirees smooth their marginal utility of consumption over their lifespan. Under certain conditions, the model predicts that retirees would prefer constant consumption. This result is intuitive, and financial planners and researchers have often assumed that retirees would like to maintain their preretirement standard of living. In addition, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security benefits are based on the premise that people want steady consumption, as benefits are adjusted for inflation.\u00a0<\/p>\n<p><strong>Read:<\/strong> How much do I need to retire? You tell me<\/p>\n<p>While maintaining steady consumption might seem intuitive, most research has studied the change in consumption right at retirement, finding a sharp postretirement drop as retirees consume less than they did while working, and several studies suggest that retired households decrease their consumption over time.<\/p>\n<p>Read more retirement <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> and advice at MarketWatch Retirement<\/p>\n<p>My colleague <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crr.bc.edu\/about-us\/anqi-chen\/\" class=\"icon none\">Anqi Chen<\/a> and I were curious about the extent to which patterns varied among households, depending on how much wealth they held and how healthy they were. To satisfy our curiosity, we examined 20 years of consumption data for households in the <em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/hrs.isr.umich.edu\/about\" class=\"icon none\">Health and Retirement Study<\/a><\/em> \u2013 a longitudinal survey that interviews a sample of households over age 50 every two years. We found that circumstances matter.<\/p>\n<p><strong>Read:<\/strong> This 66-year-old ended up living in a van 18 years ago. Now, he\u2019s turned his lifestyle into a lucrative video business<\/p>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crr.bc.edu\/briefs\/do-retirees-want-to-consume-more-less-or-the-same-as-they-age\/\" class=\"icon none\">The results show<\/a> that consumption paths are much flatter for households in higher wealth terciles (see Figure 1). That is, those with significant resources maintain their preretirement level of consumption, whereas those with limited resources see a sharper decline in their consumption as they age. Hence, financial constraints <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ear to be at least partially behind consumption declines in retirement.\u00a0<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:67.57142857142857%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-455519?width=540&amp;size=1.4797687861271676 540w, https:\/\/images.mktw.net\/im-455519?width=620&amp;size=1.4797687861271676 620w, https:\/\/images.mktw.net\/im-455519?width=639&amp;size=1.4797687861271676 639w, https:\/\/images.mktw.net\/im-455519?width=700&amp;size=1.4797687861271676 700w, https:\/\/images.mktw.net\/im-455519?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-455519?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-455519?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-455519?width=700&amp;height=473\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n      <\/figcaption><\/figure>\n<\/p><\/div>\n<p>Similarly, health status matters. Consumption for those who report themselves to be in very good\/excellent health decreases by a fraction of a percent each year, while consumption for those who report fair\/poor health decreases by 1.5% a year (see Figure 2).\u00a0<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:67.57142857142857%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-455520?width=540&amp;size=1.4797687861271676 540w, https:\/\/images.mktw.net\/im-455520?width=620&amp;size=1.4797687861271676 620w, https:\/\/images.mktw.net\/im-455520?width=639&amp;size=1.4797687861271676 639w, https:\/\/images.mktw.net\/im-455520?width=700&amp;size=1.4797687861271676 700w, https:\/\/images.mktw.net\/im-455520?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-455520?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-455520?width=700&amp;size=1.4797687861271676&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-455520?width=700&amp;height=473\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n      <\/figcaption><\/figure>\n<\/p><\/div>\n<p>       And looking just at the top third of households in terms of wealth shows that those households that are both wealthy and healthy have virtually flat consumption (see Figure 3).<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:69.42857142857143%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-455521?width=540&amp;size=1.4398200224971878 540w, https:\/\/images.mktw.net\/im-455521?width=620&amp;size=1.4398200224971878 620w, https:\/\/images.mktw.net\/im-455521?width=639&amp;size=1.4398200224971878 639w, https:\/\/images.mktw.net\/im-455521?width=700&amp;size=1.4398200224971878 700w, https:\/\/images.mktw.net\/im-455521?width=700&amp;size=1.4398200224971878&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-455521?width=700&amp;size=1.4398200224971878&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-455521?width=700&amp;size=1.4398200224971878&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-455521?width=700&amp;height=486\" alt=\"\" title=\"\">\n      <\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\">\n      <\/figcaption><\/figure>\n<\/p><\/div>\n<p>       In summary, we \u2014 like others \u2014 found that for the population as a whole, consumption declines over retirement. But we also found that constraints matter: wealthier and healthier households have relatively flat consumption paths. The clear implication is that \u201cpreferred\u201d consumption is likely much flatter than observed in the data. That is, people want to keep consumption constant, but cannot achieve that goal because they have not saved enough or health limitations intervene.\u00a0 <\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Alicia H. Munnell\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/author\/alicia-h-munnell\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:contributors@marketwatch.com\",\"text\":\"contributors@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Alicia_H_Munnell\"><\/span>Alicia H. Munnell<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7806-D787E6DD31E3%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Encore: How much do retirees want to consume?&#8221; It matters, and the answer depends on wealth, health and life expectancy Whether households prefer a constant, increasing, or decreasing path of consumption in retirement has important implications for our understanding of retirement adequacy.\u00a0 If people want steady consumption, they need more assets at retirement than if&#8230;<\/p>\n","protected":false},"author":1,"featured_media":385600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-455524\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-385599","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/385599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=385599"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/385599\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/385600"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=385599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=385599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=385599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}