Yet very little is known about pensioner spending profiles in the UK. In recent work with Steve Webb and Aida Garcia-Lazaro, we analyse data on spending behaviour of 100,000 pensioners and find key differences emerge across cohorts and housing tenure. Want to know more?

We are asked to  check out the full report here:

This paper – authored by Dr Aida Garcia-Lazaro, Dr Ricky Kanabar and Steve Webb – uses a specially constructed dataset covering the detailed spending patterns of over 100,000 pensioners surveyed between 1968 and 2019 to shed light on this question. It examines the profile of real spending through retirement for the sample as a whole, and then separately for different birth cohorts and different housing tenure groups.

They find that, amongst more recent retirees, real spending tends to be frontloaded, put another way, gradually falls as people age, but that this was not always the case. The paper also shows that homeowners tend to have a sharp decline in real spending in the early part of retirement, whereas social renters tend to have much flatter spending patterns through retirement.

A key conclusion is that proposed ‘defaults’ for post-retirement drawings on DC pension pots need to be tailored, and that housing tenure could be a key differentiator.

“Our key conclusion is that a ‘one-size-fits-all’ approach to pension
decumulation is unlikely to be a good one. Our analysis suggests that
providers should be customising their defaults based on key characteristics
of their members, and that the needs of homeowners in particular may be
very different to those living in rented accommodation in retirement”.

My contention is different – people don’t like to be paid like that

I am frightened that my capacity to earn enough to pay the bills for me , my family and help others who I value will disappear.

To suppose that older people want a wage that meets their needs and does not allow them to put money behind for the church collection or to put money on the Grand National is missing the point. My elderly relatives and friends who have put money aside are not considering health as the big drain, as a young “oldie”, I’m already thinking of paying for others to do things for me.

There will be people in my family who own their house and others who don’t but we will not be self-sufficient, we will help each other. To suppose that pension companies can determine the shape that the default income I am offered based on where I live, what I own and what I want is madness.

I am approaching retirement with the prospect of a state pension (paid to everyone on the same basis but taxed according to means). I am already getting a private pension which will go down when I draw my state pension (some of my private pension is a “bridge” to that state pension). Finally I have the stuff to turn to pension and I do not know how to get that paid to me as a pension that keeps pace with inflation.

To suppose that I can model the next 30 years of my life is absurd.  I have real problems with all these modellers from Legal and General, Aviva and Standard Life. They assume that I can decide in 2025 what will be happening in 2055.

I know damned well that I may not last that long and that I might last longer. I do not know if I will be self-sufficient or dependent on others to help me get about. What I want is to have a wage in later age around which I can organise my life not the other way round. Put another way, I do not want to model a rich opening an expensive end and a cheap middle (the U shape to theoretical later income needs). I do not want to be given an income that starts high and then is “Downhill all the way“.

In short, I want to be like everyone else having enough to pay the bills and some more to pay others and I want a degree of certainty of what that I’ll be paid based on what everyone else is getting. Customised income may be helpful if I opt out but I don’t want to opt-out, I never have. Most of my family and friends are conventional, we follow what we are offered without argument and there are expectations about wages which are hard-drilled into our lives.

So for all the experts at Bath University , LCP, Aviva, Standard Life, L&G and the FT, my thoughts are for simplicity and conformity in later life. Please do not customise my income to what you think I need, I will spend what I get paid and save what I want to save.