The brief’s key findings are:
- The impact of the financial crisis on the consumption of retirees depends on how much they have in financial assets, how they invest, and their reliance on assets for consumption.
- The crisis had little effect on those 40 percent with very small amounts of financial assets and the top 5 percent with very large amounts.
- In contrast, the broad middle class did experience declines in consumption:
- At one extreme, households that invested in short-term deposits and tried to live off the interest saw significant declines.
- At the other extreme, investors in balanced portfolios who gradually drew down their wealth lost more modest amounts.
- Most middle-class households, though, combine some behavioral aspects from the two extremes, so the impact on their consumption lies in between.