Is It Possible to Live Too Frugally During Retirement?
Yes, it is, says Matt Fellowes, CEO of United Income, in a recent report. Innovations in medicine and technology have extended human life by over 30 years since 1900, which has helped to double the amount of time the average adult now spends in retirement compared to several decades ago.
Despite retirement industry suggestions that Americans should draw down less income in retirement, Fellowes' paper suggests older Americans are not spending enough to live their retirement dreams. “Longer lives and retirements have ushered in an extraordinary opportunity for older adults to live out life-long dreams, embark on second careers, or use their experience and knowledge to give back to the next generation," he writes. "Yet, our confidence about future economic growth and our own financial wellbeing wanes as we age and in some cases overly so, which may be one reason why spending deaccelerates for aging households as they seek to maintain wealth at the expense of income preservation."
Fellowes suggests that special care needs to be taken to educate older adults about their biases to avoid investment portfolios and financial plans that are too conservative and become self-fulfilling prophecies of economic problems.”
View the full report.~