Die with zero: spend it down on purpose

Verdict

Holds with conditions

The claim holds as a challenge for households with a surplus above their own needs. The age tables show different households at one date, so they cannot show that spending down on purpose is wise for a given household. US median net worth is higher at ages 65 to 74 than at 55 to 64 and 18 per cent lower at 75 and over than at 65 to 74. Median household wealth in Great Britain peaks at 65 to 74 and often starts to decline after State Pension age, and Australian mean net worth is 36 per cent lower at 75 and over than at 65 to 69 (percentages calculated by this audit). That pattern fits spending down and differences between generations alike. Under-saving appears in the same evidence, on two different measures: 65 per cent of US non-retirees did not describe their retirement saving as on track (SHED 2025, self-reported, calculated by this audit as 100 minus 35), and 43 per cent of UK working-age people are projected to fall short of the Commission's replacement-rate targets (a DWP projection), while the Treasury's 2020 Retirement Income Review estimated that most recent Australian retirees had adequate incomes.

The cost, from the book's own figures. At a 2 per cent real return, spending 100,000 down to zero at 90 allows 5,122 a year against 4,000 for a plan that runs to 100, and the price of the larger spend is that the 24.1 per cent of males and 34.9 per cent of females who reach 65 and are alive at 90 in the SSA table would rely on a state pension and other income alone from that age.