Brookings: America Has a Retirement Spending Problem

As the debate continues over whether working-class Americans are saving sufficiently for retirement there is an equally important question of whether retirees will spend their nest egg in the right way, according to an op-ed published this week by Benjamin H. Harris, Deputy Director of the Retirement Security Project at the Brookings Institute.

Upon retirement, households are faced with a daunting challenge of turning their accumulated wealth into security and spending down their wealth in a way that allows them to deal with a host of risks such as uncertain health costs, the risk of outliving assets, and variable returns to both financial assets and housing.

“For millions of older Americans, securing a sound retirement means both accumulating wealth while working and, importantly, transforming that wealth into lifetime security through vehicles such as annuities, long-term care insurance, and even reverse mortgages,” said Harris in his op-ed, “America Has A Retirement Spending Problem.”

Harris describes the pros and cons of insurance products and reverse mortgages and why more Americans aren’t using them as retirement planning tools.