The brief’s key findings are:
- Studies show that retirees have tended to draw down their financial wealth very slowly.
- But these retirees generally had defined benefit (DB) pension plans, which pay benefits for life.
- Hence, this slow drawdown pattern may not hold for new retirees, who rely on 401(k)s.
- Indeed, the analysis finds that households with a DB plan retain more of their wealth – that is, they draw it down more slowly than those with a 401(k).
- For example, a household retiring with $200,000 in savings and a DB plan would retain $28,000 more wealth at age 70 than a similar household with no DB plan.
- The analysis suggests that many new retirees could deplete their 401(k) assets by age 85, meaning that they face a greater risk of outliving their savings.