MW Scared to spend your retirement money? Here's one way to get over the fear of running out.
By Beth Pinsker
This fear is probably going to cause you some regrets
Once you amass a significant pile of retirement savings, it can be hard to watch it dwindle.
It seems like a magical retirement fairy tale: Even as you spend money in retirement, your nest egg continues to grow. You travel, golf, volunteer - yet thanks to the power of compound interest, your portfolio growth rate outstrips your spending, so you end up with more at age 90 than you started with at 65.
This is the path that many retirees with solid savings are on, according to a new study from Corebridge Financial, one of the leading life-insurance and annuity providers in the country. Some 60% of those who were already retired had more now than when they entered retirement, and 14% had about the same. About a quarter of participants saw their assets' value go down to some degree, and a handful didn't know or weren't tracking their account value that closely.
Are the retirees whose portfolios continue to grow just really rich? Or have they figured out some secret to success?
Corebridge's research, which was developed in consultation with personal-finance guru Jean Chatzky (who has a forthcoming book on annuities called "The Forever Paycheck"), shows that what is more likely is that they are too scared to spend.
"We've spent so much time thinking about accumulation that we haven't thought about a plan to take what we have accumulated and stretch it over however long we live," Chatzky said. "It's so complicated, both tactically and emotionally, that retirees are not spending."
The trouble with 'decumulation'
The process of spending down money in retirement is called "decumulation" by professionals, and the Corebridge report is titled "The Decumulation Planning Gap." The company polled 2,200 adults between ages 49 and 79 who had at least $100,000 in investible assets. While 46% did not know what the word "decumulation" meant, they understood enough to know that they didn't like it.
When asked "How comfortable are you with your savings declining to pay for living expenses?" just under half, 49%, said that would make them "somewhat" to "very" uncomfortable.
And what of the retirees who spent less than the interest being earned on their accounts and ended up with more than they started with? They had regrets. A quarter said they probably could have withdrawn more money during retirement without compromising their financial security, and 8% said they definitely could have.
These numbers align with the behavioral patterns in the latest "How America Saves" report from Vanguard, its 25th edition of studying how people use the 401(k) retirement-savings system. The general pattern most workers exhibit is to save incrementally over the many years of their careers, mostly in one or two funds, with no trading. Most of those investors are in target-date funds that are professionally managed to align the risk of the underlying investments to a specific age and adjust it over time. By the time you retire at 65 or so, your savings should be in an age-appropriate mix to safeguard your principal, but with enough still in stocks to keep your balance growing faster than inflation.
After retirement, those workers are generally on their own. About half of participants choose to stay in the company plan, and their allocations continue on. But some 25% do a rollover to an IRA and 23% take a cash distribution, and they are left to their own devices to figure out how to invest that money.
Corebridge, as a provider of annuities, unsurprisingly advocates that investors put a portion of the funds in an annuity to create guaranteed income in retirement.
"One way to do that is with a guaranteed income stream, but that's not the only way," said David Stinnett, Vanguard's head of strategic retirement consulting. "You can create an income stream working with the help of a financial adviser, or you can use web-based services to create a custom paycheck. And the industry is trying to provide more choice."
If people do decide to go the annuity route, it's usually an open-market decision made at the point of retirement or in retirement. People need to seek out a company or a broker who will detail the terms of an annuity contract. In the simplest form - a single-premium immediate annuity - a person hands over a lump sum in exchange for a guaranteed monthly check. In the coming years, more of those staying in their company's 401(k) plan will be made an offer of some sort for either an immediate or deferred annuity, which would start at a later date that the person chooses.
"You shop for this just like anything else," said Chatzky. "You're comparing interest rates, different guarantees. You're solving for X income, and it will cost you a certain amount of money."
Most of all, you need to trust the person who is explaining it to you, Chatzky said. If they're talking at you and using language you don't understand, then get yourself out of there.
As an advanced financial product, you'll need to make sure you understand all the terms. If you go in and ask a simple question like "How much does this annuity cost?" there will likely not be a direct answer. The fees will likely not be transparent or come directly out of your pocket, but rather will be baked in to the pricing structure and interest rate offered.
"No explicit fee for a CD, but does the bank make money? Of course," said Brian Pinsky, president of individual retirement and life insurance at Corebridge. "Take our most basic fixed annuity, which is like a tax-deferred CD. How much does that cost? The true answer: There's no fee." Instead, the company takes a cut off the top of the investment return before passing along the guaranteed payment to the client.
What Pinsky said he has seen in action is that that guaranteed income frees up a retiree to spend that money each month, because they know more is coming and payments will not stop in their lifetime. This works even at lower incomes, where the annuity holder might only have Social Security and a small nest egg. "Even $500 a month can mean a lot," Pinsky said.
For his mother-in-law, it allowed her to be comfortable in her house and to live the life she wanted to live. "It allowed her to go to Perkins for breakfast, and she forced us to let her pay for lunch," he said.
Got a question about investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write to me at beth.pinsker@marketwatch.com. Please put "Fix My Portfolio" in the subject line.
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June 17, 2026 12:57 ET (16:57 GMT)
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