Retirees take cautious approach to drawdown
Most wealth held by pensioners is more likely to be bequeathed than spent in retirement, research by the Institute for Fiscal Studies (IFS) has found.
On average, retirees are expected to draw down just 17% of their wealth between ages 70 and 80, and 31% between ages 70 and 90.
Those with a higher income are more likely to access their wealth, but between ages 70 and 90 they will still only draw down 39% on average.
According to the report, the slow rate of drawdown could be the result of individuals preparing for possible costs in later life, such as funding social care.
Another motivating factor could be the desire to pass wealth on to younger generations.
Rowena Crawford, associate director at the IFS, said:
"This will have implications for the level and distribution of resources among current working age individuals, particularly those with wealthy parents and few siblings.
"Given the increased freedom people now have over how they spend their pension wealth in retirement, carefully monitoring how the use of wealth evolves in future will be important, both for the living standards of the retirees themselves, and also for younger generations."
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